FOREX-Euro up on Brexit deal hopes, trade caution caps dollar

* Euro, sterling, both rally after EU's Barnier comments
* Dollar range-bound as trade optimism fades
* Turkey's lira gains on U.S. sanctions relief
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tommy Wilkes
LONDON, Oct 15 (Reuters) - The euro gained on Tuesday,
helped by more positive noises about a Brexit deal and as fading
optimism over U.S.-China trade talks kept the dollar
range-bound.
The European Union's chief Brexit negotiator, Michel
Barnier, said a deal with Britain to cover its departure from
the EU was still possible this week. Both the pound and the euro
rose in response. A no-deal Brexit would damage the euro zone as
well as Britain, most economists say. Caution prevailed over trade talks between the United States
and China. Markets initially welcomed the "Phase 1" trade deal
between Washington and Beijing that President Donald Trump
outlined last week, but lack of detail kept many investors wary.
"The relief rally for emerging market currencies on the back
of the US-China partial trade deal has proven relatively modest
so far. The initial price action fits with our own scepticism
over whether the trade deal is a game changer for financial
markets and the global economy," MUFG analysts said.
A Bloomberg report on Monday, citing sources, said China
wants more talks as early as the end of October to decide on the
details of the Phase 1 deal before Chinese President Xi Jinping
agrees to sign it. The euro rose as much as 0.2% to $1.046 EUR=EBS before
giving up most of the gains. Measured against a basket of
currencies, the dollar was down at 98.424 .DXY .
A ZEW economic sentiment indicator is due at 0900 GMT, and
should give more insight into euro zone economic confidence.
Elsewhere, sterling rose as much as 0.7% to $1.2699 GBP=D3
and 86.90 pence per euro EURGBP=D3 , a five-month high, after
Barnier's comments.
China's yuan CNH=EBS slipped in offshore markets, a day
after reaching a one-month high. The offshore yuan traded at
7.0787 against the dollar, off Monday's high of 7.0503.
The Turkish lira rallied against the dollar after the U.S.
announced lighter sanctions than expected following Turkey's
invasion of northern Syria. The lira moved away from seven-week
lows and was last trading 0.5% higher at 5.897 TRYTOM= .