* Euro hits three-week high
* Sterling edges down after notching more than 6-month highs
* Aussie skids on falling iron ore prices
* Worries about French election, N. Korea loom in background
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
(Recasts, adds new quote, updates prices)
By Jemima Kelly
LONDON, April 19 The euro steadied on Wednesday
near a three-week high against a dollar kept weak by lower U.S.
rates and doubts over President Donald Trump's promised fiscal
The prospect of a snap British election, meanwhile, kept
sterling near a six-month peak.
With the first round of France's presidential election just
four days away and polls showing just a few points between the
top four candidates, analysts said any gains in the euro would
be capped, and the single currency was only marginally higher on
the day at $1.0837.
The stakes for investors are high, with two anti-European
Union, anti-euro candidates -- the far-right Marine Le Pen and
the far-left Jean-Luc Melenchon - among the top four.
Strategists said if it were not for dollar weakness the euro
would be showing greater sensitivity to the political risks
surrounding Sunday's first-round election. But it was being held
up by the pricing out of the bet that the U.S. Federal Reserve
would raise interest rates three times this year.
"There is a real risk that we get a choice between the
far-left and the far-right, neither of which would be
market-friendly, and both of which could leave the EU in a very
different position than it’s in today," said Rabobank currency
strategist Jane Foley, in London, arguing that the market was
The U.S. rate repricing has come on the back of
weaker-than-expected economic data and doubts that Trump will
deliver on the tax cuts and relaxed regulation he promised, a
package that traders had hoped would stimulate growth and
The dollar index, which measures the greenback against a
basket of six other major currencies, hit a three-week low on
Tuesday as 10-year Treasury yields fell below 2.2 percent to
their weakest levels since the U.S. election results, and
remained close to that level on Wednesday.
"There are greater doubts now about large-scale fiscal
stimulus under the Trump administration, and on top of that the
U.S. inflation numbers have been disappointing," said Societe
Generale currency analyst Alvin Tan, in London.
Against the yen, however, the dollar was half a percent
stronger at 108.93, with demand for the safe-haven
Japanese currency kept strong by worries over a host of
geopolitical tensions, including between North Korea and the
U.S. Treasury Secretary Steven Mnuchin was quoted saying in
the Financial Times that Trump is "absolutely not" trying to
talk down the strength of the U.S. dollar, playing down remarks
by Trump in an interview last week when he said the dollar was
"getting too strong".
Sterling stayed less than a cent away from a peak of $1.2908
hit on Tuesday, the highest level since Oct. 3, after
British Prime Minister Theresa May called a snap election for
June, saying it would strengthen Britain's hand in negotiations
with the EU.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Tokyo markets team)