FOREX-Dollar steadies, analysts flag potential short squeeze

* Dollar steadies after Friday payrolls fall
* Jobs data takes shine off dollar rebound
* Ethereum gains on futures debut
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Ritvik Carvalho
LONDON, Feb 8(Reuters) - The dollar steadied on Monday,
recovering some ground against a basket of peer currencies after
falling sharply on worse than expected U.S. jobs data last week.
The dollar index traded 0.2% higher on the day, at 91.174.
=USD . On Friday, it fell as low as 90.981 after data showed
the U.S. economy created fewer jobs than expected in January and
job losses the previous month were greater than initially
reported.
Speculators have been reducing short positions - bets the
dollar will weaken - on the currency. Some analysts have flagged
the likelihood that the same speculators will be forced out of
their short positions by a rise in the dollar.
Net bearish bets on the dollar by speculators fell to $29.95
billion for the week ended Feb. 2, compared with a net short
position of $33.81 billion for the previous week, according to
calculations by Reuters and U.S. Commodity Futures Trading
Commission data. Francesco Pesole, FX strategist at ING said, that even if
the USD recovery stalls, "we could continue to see evidence of a
USD short squeeze in the coming weeks".
The euro traded 0.2% lower against the dollar on Monday, at
$1.2029 EUR=EBS .
In a note to clients, J.P. Morgan strategists said they
"have growing confidence of underperformance of EUR vs USD".
"That warrants two changes to the portfolio: 1) rotating
away from USD to fund trades primarily out of EUR, and 2)
selling EUR/USD outright in spot."
Investor morale in the euro zone unexpectedly fell in
February as lockdowns to suppress the COVID-19 caseload left
their mark on the economy, which lost touch with other regions
in the world as they recovered further, a survey by Sentix
showed.
Sentix's investor sentiment index for the euro zone fell
back into negative territory, dropping to -0.2 from 1.3 in
January. A Reuters poll had pointed to a reading of 1.9.
The British pound GBP=D3 bought $1.3686, 0.3% lower to the
dollar.
The dollar was quoted at 105.62 yen JPY=EBS , having pulled
back from a three-month high reached on Friday.
In the cryptocurrency market, ethereum spot prices
ETH=BTSP rose nearly 3% to $1,660 after the listing of
ethereum futures on the Chicago Mercantile Exchange on Sunday.
Bitcoin BTC=BTSP , the world's biggest cryptocurrency by
market capitalisation, rose 1.2% to $39,347.
The onshore yuan CNY=CFXS edged up to 6.4547 per dollar,
but trade is likely to be subdued before the week-long Chinese
New Year holidays beginning Thursday.
Elsewhere, the Australian dollar AUD=D3 was off 0.3% at
$0.7657. Across the Tasman Sea, the New Zealand dollar NZD=D3
traded 0.2% lower at $0.7182.

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