FOREX-Dollar falls vs euro after U.S. data, yen keeps falling

* U.S. adds 157,000 jobs in January, jobless rate edges up

* Euro lifted by better-than-forecast euro zone PMI

* Yen continues weakening trend on BOJ easing view

By Wanfeng Zhou

NEW YORK, Feb 1 (Reuters) - The dollar fell to a 14-month low against the euro on Friday after U.S. jobs data reaffirmed expectations the Federal Reserve will maintain its stimulative policy and as euro zone factories had their best month in almost a year.

The yen hit a 2-1/2-year low versus the dollar and a 33-month trough versus the euro, extending its recent weakness on bets the Bank of Japan will ease monetary policy further.

The U.S. economy added 157,000 jobs last month, the Labor Department said, slightly below market expectations, but job growth in the previous two months was revised higher by 127,000.

The unemployment rate edged up 0.1 percentage point to 7.9 percent. The Fed repeated Wednesday that it would keep overnight rates near zero until the unemployment rate hits 6.5 percent, as long as inflation does not threaten to exceed 2.5 percent.

"In my opinion, we must now focus on the unemployment level. Until that improves, I see no change in Fed policy," said Matthew Lifson, senior analyst and trader at Cambridge Mercantile Group in Princeton, New Jersey. "It looks like euro euphoria will continue today."

The Fed's bond-buying and loose monetary policies have pressured the dollar and analysts said the dollar will maintain a negative bias as long as the U.S. central bank continues on that path.

The euro rose as high as $1.3674, its strongest since November 2011. It was last at $1.3635, up 0.4 percent on the day.

Earlier, a Purchasing Managers' Index survey showed euro zone factories had their most resilient month in nearly a year during January, helped by solid German output.

News that banks will repay less than expected in European Central Bank three-year loans next week dented some demand for the euro, but losses were limited by optimism the worst of the region's debt crisis is over.

"The PMIs this morning continued to maintain a pretty strong bid for the euro. It seems the path of least resistance is towards the euro going higher," said Jeremy Stretch, head of currency strategy at CIBC World Markets. He said the next target for the euro is the psychologically important level of $1.37.

The dollar rose 0.7 percent to 92.36 yen, having hit a session high of 92.39 yen, the strongest since June, 2010.

"There are some positive aspects to this report in terms of the revisions in November and December, but January's figure was slightly below expectations," said Vassili Serebriakov, currency strategist at BNP Paribas in New York.

"Overall I don't think this shows an acceleration in the labor market trend. We have seen Treasury yields dip a little bit and that is putting pressure on dollar/yen."

The dollar extended gains versus the yen after U.S. data showed the pace of growth in the manufacturing sector picked up in January to its highest level in nine months, while consumer sentiment unexpectedly improved in January.

Selling the yen has become a one-way bet, with Japanese Prime Minister Shinzo Abe heaping relentless pressure on the Bank of Japan to ease monetary policy aggressively to jolt the economy out of a decade-long malaise.

The euro rose as high as 126.14 yen, the best level since April, 2010, and was last up 1 percent at 125.80 yen.