(Update 3: Mon 30/06/14 19:39:26)

LONDON (June 30): The euro traded flat against the dollar on Monday, with market talk in Europe focused on the implications of a major fine for French bank BNP Paribas in the absence of other major themes.

Euro zone inflation was in line with expectations at 0.5 percent, reinforcing the need for the European Central Bank to run very loose monetary policy but well short of a reading that would demand more action from a monthly meeting on Thursday.

The euro has been creeping higher since mid-June, retaking some of the ground lost after the bank took steps to pump yet more money into the economy a month ago.

All of the broader market and economic trends that have supported the single currency this year remain intact but many analysts are again pointing towards growing momentum in the U.S. economy which should eventually support the dollar.

Dealers wonder whether an expected $9 billion fine for BNP from U.S. authorities could lead to the French bank exchanging billions of euros for dollars within the next few weeks. Some players said they had seen no sign BNP had taken steps to hedge the fine by accumulating dollars, or the right to buy dollars.

Others pointed to the bank's U.S. business, which may help reduce the volume of euros it must sell, and a generally sophisticated trading operation which they said should have acted to save the bank money on the necessary dollar purchases.

"There is a debate going on about the extent to which they have hedged this deal," said a London-based strategist with one large European bank.

"They may well have a lot of it already. They do have a U.S. business, but it does look like a lot of money that might have at least a temporary impact on the euro."

The other element to the settlement with U.S. authorities, expected to be announced late on Monday U.S. time, may be bans on BNP converting foreign currencies to dollars on behalf of clients for some businesses for as long as a year.

Several currency traders said they believed BNP would still be able to make other arrangements to clear through correspondent banks or other units.

Yen highs

Another fine a month ago, for Credit Suisse, moved the dollar higher against the franc. The euro was unchanged against the dollar in morning trade in Europe at $1.3653.

The dollar has been in weak form in recent weeks and was close to a more than one-month low against a basket of major currencies on Monday. Some backward-looking U.S. data last week gave investors no reason to expect higher U.S. interest rates any time soon.

This week, all eyes are on non-farm payrolls figures due a day earlier than usual, on Thursday, and expected to show the creation of another 210,000 jobs in the past month.

"If we get a strong print, it will be the fifth time in a row that we have been over 200K," said Peter Kinsella, a strategist with Germany's Commerzbank in London.

"It should only be a matter of time before the dollar finally begins to gain some traction. The euro will probably trade in a very tight range but it is probably a sell on the rallies."

The dollar index was last at 80.019, a touch lower on the day and not far from levels of 80.014 touched on Friday and not seen since May 21. Last week's fall was its biggest in more than two months, and put it on track for a flat half-year.

The yen hit a 5-week low of 101.235 yen in Asian trade.

Masashi Murata, currency strategist at Brown Brothers Harriman in Tokyo, noted how many investors had been disappointed by the dollar's performance this year.

"Most people said the U.S. dollar should be stronger than the yen in the first half of the year based on higher Treasury yields," he said. "Some people might try to sell the dollar/yen more (from here)."