FOREX-Euro stays buoyed before ECB meeting as Fed forecast knocks dollar

* Euro at more than five-week high before ECB meeting
* Dollars bulls cut positions after Fed rate signal
* Sterling riding high as voting gets underway
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds new quote, updates prices)
By Tommy Wilkes and Olga Cotaga
LONDON, Dec 12 (Reuters) - The euro stood near five-week
highs on Thursday before new European Central Bank President
Christine Lagarde's first policy meeting, after the Federal
Reserve's forecast that it would keep rates on hold through
2020.
The Fed announcement late on Wednesday, which followed its
decision to leave rates unchanged, sent the dollar to its
weakest since early August.
Traders will scrutinise Lagarde's words for her take on the
ECB's latest stimulus plans, introduced in September, and the
bank's economic forecasts. But analysts doubt the ECB meeting
will dislodge the euro from the narrow trading range it's been
in through 2019.
"Markets will be trying to get a feel for her style, but
most of the substance will be around reforming the strategy and
policy framework for the ECB," said Stephen Gallo, European head
of FX strategy at BMO Capital Markets, adding that "the bias is
towards monetary policy easing."
The euro was little changed at $1.1136 EUR=EBS in European
trade, not far from Wednesday's high of $1.1145, the strongest
since early November.
The currency's strength came from traders unwinding their
long positions on the dollar, as well as from Brexit optimism,
said Gallo, adding that he expected this to continue.
"I wouldn't be rushing to sell EUR/USD right now," he said.
The dollar was neutral against a basket of currencies,
having fallen earlier to a four-month low of 97.038 .DXY .
Investors were also on edge ahead of Sunday's deadline for a
new round of U.S. tariffs on China to take effect.
Fed Chairman Jerome Powell said the economic outlook for the
U.S. was favourable, though the Fed forecasts only moderate and
slowing growth through 2020 and 2021. New economic
projections showed 13 of 17 Fed policymakers foresaw no change
in interest rates until at least 2021.
"The Fed is sending a signal of 'Not too hot, not too
cold'," Gallo said.
The Japanese yen held on to most of its overnight gains at
108.64 JPY=EBS .
Among those benefiting from the U.S. dollar's slide were the
Australian AUD=D3 , New Zealand NZD=D3 and Hong Kong dollars
HKD=D3 - the latter rose to its highest since July - as well
as some emerging-market currencies.
The Swiss franc on Thursday also rose to its highest against
the dollar since early September CHF=EBS . The Swiss National
Bank on Thursday kept its negative interest rate on hold as
expected, and the franc was little moved against the euro
EURCHF=EBS . Sterling rose to its highest since March at $1.3229
GBP=D3 , amid dollar weakness and confidence Britain's
Conservative Party will win a majority in Thursday's election.
A majority would give Prime Minister Boris Johnson's party
control of parliament and enable him to lead Britain out of the
European Union at the end of January. Anything short of that
could prompt a slide in the British currency.
Sterling/dollar overnight implied volatility has soared to
its highest since the 2016 Brexit referendum GBPONO= .
Voting ends at 2200 GMT, with exit polls and early results
due after that. Traders expect an outcome as early as 0300 GMT
on Friday.