Dollar dips against euro as jobs gains offset by negative revisions

SINGAPORE, May 5 (Reuters) - The dollar gave back earlier gains against the euro but stayed stronger against the yen on Friday after jobs gains and wage growth for April beat economists’ forecasts but showed downward jobs revisions for March.

Employers added 253,000 jobs, beating economists' forecasts for a 180,000 gain. U.S. average hourly earnings rose at an annual rate of 4.4%, above expectations for a 4.2% increase.

But data for March was also revised lower to show 165,000 jobs added instead of 236,000 as previously reported.

“The headline number is probably not as strong as it looks given the backward revisions,” said Vassili Serebriakov, an FX strategist at UBS in New York.

The initial move up in the greenback was likely in part due to investors who were short the currency, or betting it would fall, covering their positions, he added.

The dollar has fallen from a 20-year high last September as investors adjust for the likelihood that the Federal Reserve is at or near the end of its tightening cycle, while peers including the European Central Bank have gotten more hawkish.

Investors are pricing in the likelihood that the Fed will cut rates in the second half of this year. However, while the economy is slowing, there are still pockets of strength, which is making investors hesitant to get too much more bearish on the U.S. currency for now.

"In the near term it's hard to get a lot of momentum until we have a more clear directional signal from U.S. data," said Serebriakov. "For us the resolution ultimately is for consistently weaker U.S. data and a weaker dollar ultimately and a more dovish Fed."

Fed funds futures traders are pricing in around 75 basis points of cuts by year-end. The Fed raised rates by 25 basis points to 5% to 5.25% on Wednesday and dropped from its policy statement language saying that it "anticipates" further rate increases would be needed.

The dollar index hit a session high of 101.77, before falling back to 101.19, down 0.13% on the day. The euro fell to $1.0967, before bouncing back to $1.1026, up 0.11%.

The greenback gained 0.40% to 134.79 Japanese yen .

Technical analysts at JPMorgan including Jason Hunter noted on Friday that there are bearish divergences on the daily EUR/USD chart and that the single currency's gains have stalled, but the rally is "not decisively over."

The bank said that if the euro sees sustained weakness below the $1.0909 and $1.0831 levels, it would confirm a short-term trend reversal, while a drop below $1.0762 "would imply a more significant trend reversal is in the making."

The euro also fell against sterling to 87.11 pence on Friday, the lowest since Dec. 20.

Consumer price data due next week is the next major U.S. economic focus.

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Currency bid prices at 3:00PM (1900 GMT)