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FOREX-U.S. dollar posts second week of gains ahead of Fed meeting

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* Potential "Golden Cross" in dollar index seen lifting it * But dollar's rally may be losing steam -analyst * Focus on Fed meeting next week * Economists expect Fed to advance discussions in tapering (Adds new comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, July 23 (Reuters) - The U.S. dollar on Friday notched a second week of gains after a volatile few days when currencies moved with shifting risk appetite, with the market's focus now on next week's Federal Reserve meeting. Some analysts wondered, though, whether the dollar's recent rally may be losing momentum. The dollar index, which measures the greenback against a basket of six major currencies, was slightly higher on the day at 92.894. For the week, it was up 0.1%, after rising 0.6% previously. But that was off a 3-1/2-month high of 93.194 hit on Wednesday, bolstered by strong Wall Street earnings that helped investors regain some confidence in the midst of worries that the Delta coronavirus variant could derail the global recovery. Risk appetite remained high on Friday, with the rise in U.S. stocks, the sell-off in Treasuries, the gains in most commodity currencies, and the greenback coming off its peaks. "Medium-term oscillators and momentum are in sync on the upside suggesting potential higher highs to come, such as 94.30-94.72 (on the dollar index)," said Dave Rosenberg, chief economist and strategist, at Rosenberg Research. He also cited the potential of a "Golden Cross" in the dollar index, a chart pattern in which the 50-day moving average crosses above the 200-day moving average, a bullish signal. "Overall, the dollar(index) leans toward further upside which could add to recent pressure in commodity prices and other currencies. Support is at 92.00-91.50," said Rosenberg. So far in July, the dollar has gained 0.6%, after rising 2.8% in June. Erik Nelson, macro strategist, at Wells Fargo Securities in New York, however, was not convinced the dollar could hold its gains in the coming weeks given the decline in U.S. yields. "The dollar looks tired especially after the rally of the last few weeks," said "It seems to be running out of steam both from a fundamental and technical perspective." Since the beginning of July, U.S. benchmark 10-year Treasury yields have lost 18 basis points, on track for their largest monthly fall since March 2020. The dollar typically moves in tandem with U.S. yields. Nelson also believes the Fed is going to be one of the laggards among central banks in normalizing monetary policy. Investors' next major focus is the Fed's two-day policy meeting next week. Since the June 16 meeting, when Fed officials dropped a reference to the coronavirus as a weight on the economy, cases have risen. Many economists still expect the meeting to advance discussions for a tapering of stimulus. Against the safe-harbor yen, the dollar rose 0.3% to 110.53 yen. Meanwhile, the euro was flat at $1.1770, showing little reaction to the purchasing manager surveys coming out of France, Germany and the euro zone as a whole. Euro zone business activity expanded at its fastest monthly pace in over two decades in July as the loosening of more COVID-19 restrictions gave a boost to services, but fears of another wave of infections hit business confidence. ======================================================== Currency bid prices at 3:18PM (1918 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 92.8790 92.8310 +0.07% 3.221% +93.0280 +92.7770 Euro/Dollar $1.1774 $1.1771 +0.02% -3.64% +$1.1787 +$1.1755 Dollar/Yen 110.5200 110.1550 +0.34% +6.97% +110.5850 +109.9200 Euro/Yen 130.12 129.65 +0.36% +2.52% +130.1800 +129.6300 Dollar/Swiss 0.9198 0.9192 +0.08% +3.98% +0.9222 +0.9187 Sterling/Dollar $1.3751 $1.3769 -0.11% +0.68% +$1.3779 +$1.3720 Dollar/Canadian 1.2571 1.2555 +0.12% -1.29% +1.2607 +1.2552 Aussie/Dollar $0.7366 $0.7384 -0.22% -4.23% +$0.7400 +$0.7357 Euro/Swiss 1.0829 1.0819 +0.09% +0.20% +1.0841 +1.0817 Euro/Sterling 0.8561 0.8547 +0.16% -4.21% +0.8584 +0.8547 NZ $0.6981 $0.6975 +0.07% -2.81% +$0.6992 +$0.6961 Dollar/Dollar Dollar/Norway 8.8695 8.8495 +0.29% +3.35% +8.8935 +8.8355 Euro/Norway 10.4454 10.4076 +0.36% -0.21% +10.4600 +10.4065 Dollar/Sweden 8.6837 8.6771 +0.09% +5.95% +8.7032 +8.6723 Euro/Sweden 10.2253 10.2160 +0.09% +1.48% +10.2327 +10.2068 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Ritvik Carvalho in London; Editing by Mark Potter and Nick Zieminski)

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