FOREX-Dollar near two-week high before Fed and after dovish ECB

* All eyes on Fed statement at 1800 GMT, Powell speech
* Draghi's U-turn sent euro to two-week low
* Yuan eases back from three-week high hit on trade hopes
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds latest prices, new quote)
By Tommy Wilkes
LONDON, June 19 (Reuters) - The dollar traded near two-week
highs against the euro on Wednesday as investors waited to see
whether the U.S. Federal Reserve would sound as dovish on future
interest rate cuts and stimulus as the European Central Bank.
ECB President Mario Draghi's about-face on easing on Tuesday
fuelled talk of a worldwide wave of central bank stimulus,
firing up stocks, bonds and commodities and weakening the euro,
although currency moves were relatively small. The Fed is scheduled to release its monetary policy
statement at 1800 GMT, followed by a press conference by
Chairman Jerome Powell. Futures markets have almost fully priced
in a quarter-point easing in July and imply more than 60 basis
points of cuts by Christmas. The euro gained 0.1% to $1.1203 EUR=EBS , having fallen to
a two-week low of $1.1181 on Tuesday after Draghi spoke and
German government bond yields dropped to new record lows.
The dollar, measured against other currencies, fell 0.1% to
97.561 .DXY from Tuesday's two-week high.
The dollar had been under pressure in late May as global
trade tensions and economic weakness led investors to bet on Fed
rate cuts. Expectations other central banks will follow suit
have since helped the dollar recover.
"Relative to what the market is priced for, it's hard to see
how they (the Fed) will surprise the market on the dovish side.
The risks are the other way," said Adam Cole, a currencies
strategist at RBC Capital Markets.
Cole said he believed the market was "underplaying" the
spread between Europe and the United States, and even if the Fed
cuts, investors will still be paying to hold euros while earning
a relatively good yield with dollars.
That should support the U.S. currency, with Cole predicting
a low for the euro of $1.10 this year.
U.S. President Donald Trump said on Tuesday he would have an
extended meeting with Chinese President Xi Jinping at the Group
of 20 summit later this month, raising hopes they can ease
tensions in a trade dispute that has damaged the world economy.
UBS wealth management said that the dollar could rise
against the yen if the Fed was less dovish than expected or the
G-20 summit ends with a temporary U.S.-China trade war truce
"A bounce toward 110 would make adding short USDJPY
positions attractive," UBS said. "We expect USDJPY to grind
lower as US growth slows and as US-China trade tensions
persist."
The yen stood little changed at 108.41 yen per dollar
JPY=EBS .
China's yuan pulled back from Tuesday's three-week high
following reports that Xi and Trump would meet. The offshore
yuan last traded at 6.9070 CNH=EBS , down 0.1% on the day.
Sterling rose to $1.2575 GBP=D3 after May inflation rose
in line with expectations, although concern that eurosceptic
Boris Johnson would become Britain's next prime minister is
likely to cap any rally.

(Editing by Larry King)