FOREX-Euro slides to 3-week low as dollar jumps on Fed rate repricing

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Dollar regains composure as markets reprice chance of Fed
easing
* Turkish lira stabilizes after cbank governor fired by
president
* Sterling on defensive due to rate cut speculation

By OLGA COTAGA
LONDON, July 9 (Reuters) - The euro dropped to a three-week
low against a broadly stronger dollar on Tuesday as investors
re-assessed their expectations of how much the Federal Reserve
may cut interest rates this month.
Following a stronger than expected non-farm payrolls report
on Friday, traders are questioning "the excessive dovish hopes"
they had for a Federal Reserve rate cut, said David Madden, an
analyst at CMC Markets.
The common currency fell to a low of $1.1206 EUR=EBS , its
lowest since mid-June.
The dollar index, which measures the greenback against a
basket of rival currencies, rose 0.1% to 97.488 .DXY , a
three-week high.
Expectations of a 50-basis-point cut have reduced to 5.9%
from a 25% chance seen last week. Investors also think there is
a higher chance the Fed will not cut rates at the September
meeting.
"There were simply too may dollar shorts built up before
Powell's testimony," said Yukio Ishizuki, foreign exchange
strategist at Daiwa Securities in Tokyo.
Still, money markets are pricing in a 94% probability of a
25-basis-point rate cut at the Fed meeting on July 31, according
to CME Group's FedWatch tool. A week ago, they saw a 75% chance
of a cut.
Fed chief Jerome Powell's comments during two days of
testimony to Congress beginning on Wednesday will be watched to
determine whether traders will continue to reduce bets for deep
interest rate cuts.
A cooling in the U.S.-China trade dispute since the G20
summit in Japan has added to dollar strength. "Things haven't
gotten worse at least and that's a positive," said Madden.
Elsewhere, a rising dollar pushed the British pound down to
a fresh six-month low of $1.2480 GBP=D3 , the lowest since the
"flash crash" on Jan. 3 when the pound dropped to $1.2409.
"The dollar is bouncing back, so there are some downside
risks for the euro and cable (sterling-dollar)," said Masafumi
Yamamoto, chief currency strategist at Mizuho Securities in
Tokyo.
Data on UK gross domestic product and industrial output are
due Wednesday, while the Bank of England will release its
financial stability report on Thursday, which could help traders
gauge whether the BoE will take a more dovish view of the
economy.
Last week Bank of England Governor Mark Carney said a global
trade war and a no-deal Brexit were growing risks to Britain's
economy. That prompted investors to increase their bets on a BoE
interest rate cut. The Turkish lira steadied after sharp declines caused by
President Tayyip Erdogan's dismissal of the central bank
governor over the weekend, a move that prompted worries about
the bank's independence. The lira at one point slid to a two-week low of 5.8245 to
the dollar TRYTOM=D3 and was last quoted at 5.7335.