Dollar dips vs euro in holiday-thinned trade

By Jessica Mortimer

LONDON (Reuters) - The dollar dipped against the euro on Friday, reversing some of its sharp gains the previous session following weak U.S. jobs data which dampened hopes that the global economy is poised to recover.

Trading was extremely thin, however, due to the U.S. Independence Day holiday, with most major currency pairs staying within very tight ranges.

On Thursday, data showed U.S. economy lost a much greater than expected 467,000 jobs in June, while unemployment in Europe also rose to a 10-year high in May, pointing to a long, slow economic recovery and causing market sentiment to sour.

The bleak data pressured the euro and currencies perceived to be higher risk such as the Australian and New Zealand dollars, but on Friday they recouped some of those losses, which some in the market judged to have been overdone.

This kept the euro hovering around the $1.40 level, but it was still well below the $1.42 hit earlier in the week, which some analysts took as an indication that recent rallys against the dollar could be fizzling out.

"The euro, the Aussie and the Kiwi dollars have not rallied much from their lows and that is worrying," said Maurice Pomery, managing director at Strategic Alpha.

"A lot of people are still quite short dollars, but some of the components in the U.S. non-farm payrolls numbers were very poor and equities are not out of the woods yet," he said.

At 11 a.m. EDT, the euro was at $1.4000, up 0.4 percent from U.S. levels at 5:30 p.m. EDT. On Thursday, the pair fell as low as $1.3927, its lowest since June 25.