(Reuters) - The euro dipped towards a five-week trough against the dollar on Friday, hit by a European Central Bank pledge to keep interest rates low and vulnerable to more losses if U.S. jobs data turns out strong. The dollar could test near three-year high against a basket of currencies hit in May .DXY, traders said, if the payrolls data due at 1230 GMT (8.30 a.m EDT) shows improvements in line with the Federal Reserve's forecast. That would bolster expectations that the U.S. central bank will start slowing its asset purchases as early as September. In sharp contrast, the ECB pledged on Thursday to keep rates low for an extended period, driving the yield gap between 10-year U.S. Treasury bonds and German Bunds to its widest since April 2010, also pointing to more gains for the dollar. The 10-year gap between Treasuries and UK gilts was heading towards its highest in seven years after new Bank of England governor Mark Carney also signaled UK rates would stay low. That also drove sterling to a near four-month low of $1.4998. "Euro and sterling are both reeling after central banks moved to depress short-term rates and said any tightening will lead to a response," said Chris Walker, currency strategist at Barclays. "In that scenario, the currencies will only weaken". "Add to that, if the U.S. jobs numbers beat expectations, then we could see the dollar extend gains." The euro fell to $1.2884, down 0.2 percent on the day, having hit a five-week low of $1.2883 on Thursday. The dollar index was up at 83.935, its highest since late May and within reach of its May 23 peak of 84.498, a break of which could add fresh momentum to the currency. Forecasts are for a 165,000 rise in U.S. employment, with the jobless rate ticking down to 7.5 percent, edging closer to "the vicinity of 7 percent", which Fed Chairman Ben Bernanke has signaled as a level at which bond buying could stop. The dollar also gained 0.2 percent to 100.28 yen, ticking up towards Wednesday's one-month high of 100.86. Despite the firmness in the dollar, the option market is showing strong demand for dollar/yen puts, or bets the U.S. currency will lose ground, with risk reversal spreads near the widest level in favor of dollar puts in two weeks. "This is likely a result of speculators unwinding their bets against the yen," said Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan. "That seems to suggest that, if you look at two to three week terms, speculators will have fresh capacity to sell the yen," he said, adding that Japan's upper house election on July 21 could be a trigger for yen selling. Prime Minister Shinzo Abe and his coalition partner are expected to score a hefty victory, likely ending years of a hung parliament in Japan.

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