FOREX-Euro on back foot before ZEW data, rate cut talk hurts Aussie

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Tracking the coronavirus https://tmsnrt.rs/3aIRuz7
* Euro draws fire as focus shifts to economic outlook
* Pound slips on worries about relations with EU
* Virus still a worry as traders try to measure impact

By Stanley White
TOKYO, Feb 18 (Reuters) - The euro was pinned near a
three-year low versus the dollar ahead of a highly watched
German survey on Tuesday, which is expected to show a sharp
slump in investor confidence and fuel growing pessimism about
the outlook for Europe's largest economy.
Financial markets clung to tight ranges following a U.S.
public holiday on Monday, shifting the investor focus to
European news and developments in the coronavirus crisis.
Among Asian currencies, the Australian dollar slipped below
the 67 U.S. cent level after minutes from the central bank's
last meeting revived the prospect of policy easing, while the
Chinese yuan was weighed by worries about the economic fallout
from the coronavirus epidemic.
Sentiment for the euro has worsened dramatically this month
after weak manufacturing and gross domestic product data from
Germany suggested that the euro zone is more vulnerable to
external shocks that previously thought.
"The euro is close to testing an important support level at
$1.08 due to the diverging economic outlook between the euro
zone and the United States," said Junichi Ishikawa, senior
foreign exchange strategist at IG Securities in Tokyo.
"It looks a little oversold, so in the very short-term there
could be a bounce, but the euro's fundamentals still point more
to the downside."
The euro EUR=EBS traded at $1.0831, close to its lowest
since April 2017.
Since the start of February, the single currency has lost
2.4% versus the greenback as disappointing economic data raised
concerns that euro zone monetary policy will have to remain
accommodative for much longer.
The euro's next hurdle is the release of Germany's ZEW
survey later on Tuesday, which is forecast to show economic
sentiment slipped from the highest since July 2015.
Sterling also nursed losses against the dollar and the euro
due to worries about economic ties between Britain and the
European Union as both sides laid out conflicting views on how
to proceed with trade negotiations.
The pound GBP=D3 held steady at $1.2998 in Asia on Tuesday
following a 0.3% decline in the previous session. Sterling
EURGBP=D3 was quoted at 83.35 pence per euro, nursing a 0.4%
decline on Monday.
Prime Minister Boris Johnson's Europe adviser David Frost
said on Monday Britain would not be threatened into following EU
rules to win a free trade agreement with the bloc. Frost's comments contrast with those of European Commission
President Ursula von der Leyen, who has called on Britain to
guarantee fair competition based on ambitious environmental and
labour standards. Britain left the EU last month and the two sides will now
start negotiating a new relationship from trade to security.
The onshore yuan CNY=CFXS fell 0.2% to 6.9956 versus the
dollar, unsettled by a decline in Chinese shares after Apple Inc
AAPL.O said it will not meet sales targets because the virus
epidemic has slowed production and demand in China. China's Hubei province, considered the epicentre of the
coronavirus outbreak, said new cases of the illness fell
slightly to 1,807 on Monday from 1,933 the previous day,
although global experts warn it is still too early to say the
outbreak is being contained. Currency traders are cautiously monitoring new data on the
virus given uncertainty about the actual number of cases and
difficulties in estimating when the epidemic will peak.
The yen JPY=EBS , which initially gained on safe-haven
flows as the outbreak unfolded last month, nudged higher to
109.73 per dollar but remained in a narrow range.
The Australian dollar AUD=D3 fell 0.35% to $0.6693 after
minutes from the Reserve Bank of Australia's first meeting of
the year showed policymakers discussed easing policy.
The RBA kept rates unchanged at an all-time low of 0.75% at
that meeting, but the minutes showed central bankers are
prepared to ease policy further if needed.
The New Zealand dollar NZD=D3 also fell 0.28% to $0.6419.
The antipodean currencies have been buffeted by the virus
due to Australia's and New Zealand's extensive trade ties with
China, with commodities, tourism and education especially
vulnerable.