FOREX-Dollar gains versus euro, yen on Fed view
* Dollar near 3-1/2-year high vs yen, three-month high vs euro
* U.S. job gains stoke speculation Fed may quit QE
* Yen to fall further on prospect of aggressive BOJ easing in April
NEW YORK, March 11 (Reuters) - The dollar edged higher against major currencies on Monday after stronger-than-expected U.S. jobs growth in February added to optimism about the world's largest economy.
Encouraging U.S. employment data last week fuelled speculation the Federal Reserve could back off its ultra-loose monetary policy sooner than anticipated, and this is likely to keep the dollar buoyant for now.
The dollar was up slightly on the day at 82.793 against a basket major currencies, not far from the seven-month high of 82.924 hit on Friday. Having risen 4.8 percent since a low hit in early February, the index is seen on course to test its July 2012 peak of 84.10.
"Upcoming economic data or commentary from Fed officials that reinforce the notion of an earlier-than-expected exit from quantitative easing should continue to be broadly supportive of the U.S. dollar," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Some strategists, however, said market reaction to the jobs data might have been overdone and the dollar could see some consolidation around these levels.
"It is hard to glean anything too conclusive from the (U.S. jobs) numbers, and Friday's (dollar) move looks like a slight overreaction," analysts at Lloyds said in a note.
"So while we would not be aggressive dollar sellers, we would look for a correction to dollar strength from here, and 83 on the dollar index is likely to prove difficult to break."
The dollar was up 0.1 percent to 96.12 yen, not far from Friday's high of 96.60 yen, which was its highest level since Aug. 12, 2009.
Against the firm dollar, the euro was down 0.1 percent at $1.2994, having hit a three-month low of $1.2955 on Friday. Traders said buyers could emerge on dips around $1.2950 which could act as near-term support and most would continue to sell of rallies around $1.3030.
Data released on Friday showed speculators boosted their bets in favor of the U.S. dollar in the latest week to the highest in more than seven months.
Strategists said while the Fed's next policy step could be to scale back its stimulus, the world's other major central banks could ease policy further.
The Bank of Japan is perceived to be seeking a "new dimension" of easing under a new governor, Haruhiko Kuroda, who is expected to be appointed this month.
Many in the market expect the BOJ to ease aggressively at Kuroda's first policy meeting on April 3-4 as he promised to move quickly to implement fresh monetary stimulus on Monday and this could lead to further yen weakness.
While the European Central Bank is a bit more cautious about further easing, International Monetary Fund head Christine Lagarde said on Friday the ECB should lower rates.
"For the ECB, markets are speculating more aggressive easing, which is in contrast with expectation to the what is happening in the Fed and that is inherently negative for euro/dollar," Marinov said.
Analysts said the euro was also likely to trend lower against the dollar because of growing worries about peripheral countries and political concerns about Italy.
Ratings agency Fitch added to Italy's mounting problems on Friday by cutting its credit rating due to the political uncertainty, deep recession and rising debt.