* Euro weakens before Thursday's European Central Bank decision
* Canadian, New Zealand dollars both lower before policy meetings
* Struggle for direction after mixed messages from U.S. data
* Yen broadly higher (Recasts after start of European trade)
By Patrick Graham
LONDON, March 7 (Reuters) - The euro dipped almost half a percent at the start of the run-in to a European Central Bank meeting on Thursday widely expected to ease monetary policy further to help shore up still shaky euro zone growth.
The bank is expected to push interest rates further into negative territory and make some kind of adjustment to its bond buying programme, but after the bank disappointed many in markets in December, traders are loathe to bet heavily against the euro. data on Friday showed the first rise in dollar "longs" - or bets it will rise - since mid-January, but mixed messages in Friday's U.S. labour report and other data have largely halted further progress.
"I think there is still a higher likelihood that they overdeliver and the euro goes down to around $1.08, maybe the high $1.07s," said Ulrich Leuchtmann, head of currencies research at Commerzbank (DE:CBKG) in Frankfurt.
"But for traders it is still tricky. Clearly there will be a much bigger move if they do not deliver."
The euro EUR= traded 0.5 percent lower at $1.0954 in early trade in Europe. It fell 0.7 percent against the yen to 124.47 yen. EURJPY=
The Canadian CAD= and New Zealand NZD= dollars, also the subject of central bank meetings this week, were also both weaker, but losses against the yen JPY= kept the gain in the overall U.S. dollar index at just 0.25 percent. .DXY
The greenback had initially gained on Friday in a knee-jerk reaction to an upbeat nonfarm payrolls report which showed solid job growth of 242,000.
But it went into reverse as markets appeared to latch onto a disappointing fall in hourly earnings. While the robust payrolls report raised prospects of the Federal Reserve hiking interest rates this year, the decline in earnings helped temper such hopes. dollar was down 0.2 percent at 113.61 yen JPY= after rising briefly to 114.25 on Friday following the employment report release, just over 2 yen above last month's 16-month low below 111 yen.
"The dollar did not gain much against the yen on the non-farm jobs report mainly due to the tepid response by equities. The currency pair continues to be driven mainly by risk sentiment," said Shusuke Yamada, chief Japan FX strategist at Bank of America Merrill Lynch (NYSE:BAC) in Tokyo.
Those gains for the yen point to the bigger issues around the ECB's moves: negative rates, so far, have largely failed to substantially weaken the yen or the Swiss franc.
"If all central banks are taking care of weakening their currencies, it is difficult to establish a new trend," said Commerz's Leuchtmann. "You see a general situation where the dollar is rising again and every move higher weakens the case for whatever minimal chance of a rate rise the market is pricing in. Right at the moment we are a little bit stuck."