FOREX-Shaky yen looks to BOJ, euro pauses before ECB review

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Currencies on hold as risks to global growth recede
* Risk-on mood supports dollar/yen
* Traders await more details from BOJ, ECB on policy tone

By Stanley White
TOKYO, Jan 21 (Reuters) - The yen traded near an eight-month
low versus the dollar on Tuesday, while the euro held steady as
investors awaited meetings of the Bank of Japan and European
Central Bank amid a slightly improving backdrop for global
growth.
The BOJ is first off the block with its two-day meeting
ending later in the day. The central bank is expected to keep
policy on hold, with traders focusing on comments from governor
Haruhiko Kuroda to gauge the rates and economic outlook after
the conclusion of a preliminary U.S.-China trade deal last week.
The euro was locked in a narrow range before a European
Central Bank (ECB) meeting on Thursday where it is expected to
launch a comprehensive review of central bank strategy,
including the ECB's inflation target.
Trading in key currencies is likely to be subdued as
investors try to assess how major central banks will respond to
receding risks to the global economic outlook.
"The International Monetary Fund has revised up Japan's
economic forecasts due to government stimulus, and dollar/yen is
likely to edge higher as equity markets show risk-on trades,"
said Masafumi Yamamoto, chief currency strategist at Mizuho
Securities in Tokyo.
"The euro zone economy has bottomed out, but the ECB is
waiting for signs that the economy is picking up, so a recovery
in the euro is likely to be delayed."
The yen JPY=EBS was little changed at 110.17 per dollar on
Tuesday, close to its lowest since May 2019.
Against the dollar, the euro EUR=EBS traded at $1.1096.
The common currency was also quoted at EURGBP=D3 85.34 pence.
The dollar index against a basket of six major currencies
stood at 97.606, near the highest level in a month.
At the two-day rate review that ends on Tuesday, the BOJ is
set to keep its short-term interest rate target at minus 0.1%
and a pledge to guide 10-year government bond yields around
zero. The BOJ is also set to nudge up its growth forecasts as
improved macroeconomic indicators take some pressure off the
central bank for more stimulus, but traders will scrutinise
Kuroda's remarks after the policy decision.
The ECB's first meeting of the year is most likely to launch
a rethink of an inflation goal the bank has failed to meet since
2013.
The scope and scale of the review will be a key focus for
markets given the far-reaching implications for monetary policy.
A slightly brighter tone to data means the ECB's assessment
of the economic outlook will also be watched closely by
investors on Thursday.
Elsewhere in currencies, the Australian dollar AUD=D3 was
little changed at $0.6876 before labour market data on Thursday
that could help determine whether the Reserver Bank of Australia
lowers rates at a meeting on Feb. 4.
The New Zealand dollar NZD=D3 was also steady at $0.6609
as traders braced for the release of consumer price data on
Friday.