FOREX-Euro struggles vs dollar as attention turns to Fed

* All eyes on Jackson Hole meeting, euro/dollar flat
* Euro little moved by Italian PM resigning
* Sterling weakens as Johnson heads to Germany
* Yen on the backfoot
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Tommy Wilkes
LONDON, Aug 21 (Reuters) - The euro struggled to make
headway against a resilient dollar on Wednesday and was stuck
near $1.11, with forex markets mostly calm ahead of a crucial
meeting of central bankers later this week.
With markets rushing to price significant easing from
central banks in the United States and Europe, the outlook for
euro/dollar will depend largely on whether or not policymakers
live up to those expectations.
Officials from major central banks will gather at Jackson
Hole, Wyoming, on Friday with markets focused on a scheduled
speech by Federal Reserve Chair Jerome Powell.
His comments are of particular interest after last week's
inversion of the U.S. yield curve - widely regarded as a
recession signal - boosted expectations the Fed would lower
interest rates at its September policy meeting. Faced with
rising risks to the U.S. economy, the central bank in July cut
rates for the first time since the financial crisis.
"In the big scheme of things, markets are relatively
range-bound, with the focus on Jackson Hole later this week,"
said Manuel Oliveri, a strategist at Credit Agricole.
The euro was last down 0.1% at $1.1092 EUR=EBS . The
dollar, measured against a basket of currencies, rose 0.1% to
98.265 .DXY .
Oliveri expects the euro to strengthen towards $1.12 by
September, even though the European Central Bank will struggle
to exceed investor expectations for cutting rates.
Talk of more fiscal spending in Germany, and the hit to the
U.S. yield advantage from falling interest rates, should support
the euro, he added.
"Fiscal stimulus is a positive for the currency," he said.
The dollar has also been supported by talk of more spending
- President Donald Trump said on Tuesday his administration was
considering potential tax cuts on wages as well as profits from
asset sales. The single currency was little moved on Tuesday after
Italy's Prime Minister Giuseppe Conte announced his resignation,
with some investors believing the move made a snap general
election less likely. Elsewhere, sterling was the big focus as Prime Minister
Boris Johnson heads to Berlin to meet Chancellor Angela Merkel
for talks over Brexit.
The pound jumped on Tuesday after Merkel raised the
possibility of practical solutions to the so-called backstop -
an insurance policy for the Irish border after Brexit -that
London opposes. With the British currency having slumped in recent weeks on
concerns about a no-deal Brexit on Oct. 31, investors have built
up a huge short position - analysts say that makes the currency
vulnerable should any positive noises emerge from Johnson's
meeting with Merkel.
Sterling was last down 0.3% at $1.2134 GBP=D3 and 0.2%
lower versus the euro at 91.405 pence EURGBP=D3 .
The dollar rose against the yen, rising 0.3% to 106.55
JPY=EBS .
MUFG analysts said the dollar was rising against the yen
after Trump said he wanted to introduce new tax cuts and on
reports that negotiations to agree a U.S.-Japan trade deal were
making progress. "While trade talks are ongoing, it will be more difficult
for Japan to express concern over a stronger yen given President
Trump's concerns over currency manipulation," the analysts
wrote.