* Euro, sterling, both rally after EU's Barnier comments
* Dollar range-bound as trade optimism fades
* Turkey's lira gains on U.S. sanctions relief
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, Oct 15 (Reuters) - The dollar gained for a second
consecutive day on Tuesday as fading optimism over the latest
China-U.S. trade truce prompted traders to buy the greenback
after a selloff last week.
The greenback had come under selling pressure recently as
the combination of some tepid U.S. data and hopes of a
breakthrough in a protracted trade conflict between Washington
and Beijing prompted funds to unwind some of their extreme
dollar long bets.
"After the recent flushout of dollar long bets, currency
investors have reassessed the short-term outlook and have come
to the view that there is not going to be much of a movement on
the trade issue," said Stephen Gallo, European Head of FX
Strategy at BMO.
Reports of a "Phase 1" trade deal between the United States
and China last week had earlier cheered markets but the dearth
of details around the agreement has since curbed this enthusiasm
with oil prices extending declines, Chinese stocks weaker and
the safe-haven yen holding gains versus dollar. MKTS/GLOB
Against a broad basket of its rivals .DXY , the dollar
strengthened for a second day and was up 0.1% to 98.55 and
around 1% away from a near 2-1/2 year high of 99.67 hit earlier
this month.
While the dollar was over-valued on a trade-weighted basis,
analysts at ING argued the greenback's valuation was not
stretched in a historical context and suggested there was still
scope for further dollar gains should the global trade outlook
worsen.
Fading hopes over a trade deal also pulled the Chinese
currency lower.
China's yuan CNH=EBS slipped in offshore markets, a day
after reaching a one-month high. The offshore yuan traded at
7.0787 against the dollar, off Monday's high of 7.0503.
Though a monthly survey showed the mood among German
investors worsened less in October than expectations, the euro
failed to get much of a boost from the data with the single
currency EUR=EBS down 0.2% at $1.1007.
Elsewhere, sterling trimmed some of its earlier gains as
officials raced towards putting a Brexit deal in place by the
end of Tuesday.
Britain's latest proposals on the terms of its departure
from the European Union are still not enough for an agreement
and a legal text is needed by the end of Tuesday for a deal to
be agreed at a leaders' summit this week, three diplomatic
sources said. The pound GBP=D3 was up 0.3% at $1.2646, trimming some of
its gains after being up nearly 0.7% in early London trading.
USD valuations https://tmsnrt.rs/2IRpVqZ
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