FOREX-Dollar struggles after biggest weekly drop in 4 months; G20 eyed

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee
LONDON, June 24 (Reuters) - The dollar was on the back foot
on Monday after sustaining its biggest weekly drop in four
months last week as traders remained cautious about the
prospects of trade talks between the United States and China at
this week's G20 summit.
The greenback has been on the receiving end of a broad
market selloff in major currencies as global central banks led
by the U.S. Federal Reserve signaled a dovish outlook on
monetary policy due to growing signs of a weak global economy.
The dollar fell 1.4% against other currencies last week
.DXY , its biggest weekly drop since mid-February. On Monday,
it edged 0.1% lower to 96.11.
But the selloff has raised concerns that markets have turned
excessively bearish against the dollar, especially since the Fed
has the most room to cut interest rates relative to its peers,
such as the European Central Bank, where rates are already in
negative territory.
"U.S. rates are still higher than other countries' rates and
U.S. bond yields are not likely to go negative any time soon,
whereas many other countries' yields are already negative far
out into the curve," said Marshall Gittler, chief strategist at
ACLS Global.
"It's the best of a bad bunch."
Latest weekly positioning data confirmed that view.
While hedge funds have turned mildly bearish on the outlook
for the dollar in the latest weekly positioning figures, they
have ramped up bearish bets against currencies such as the
Australian dollar on fears of rising challenges for the global
economy.
Investors focused on whether Washington and Beijing can
resolve their trade dispute at a summit in Japan this week.
Both China and the United States should make compromises in
trade talks, Chinese Vice Commerce Minister Wang Shouwen said on
Monday. Elsewhere, the euro stretched its rally last week, when it
added 1.4%, rising about 0.15% to $1.1386 EUR= , its highest
since March 22. It last traded at $1.1381.