August 28, 2017 / 8:22 AM / in a year

FOREX-Euro hits 2-1/2-year high near $1.20

* EUR/USD extends gains, hits highest since January 2015

* Euro boosted as ECB’s Draghi does not talk it down in Wyoming

* USD/JPY down but above recent low, Swiss franc touches 1-mth high

* Graphic: World FX rates in 2017

By Jemima Kelly

LONDON, Aug 28 (Reuters) - The euro climbed to a 2-1/2-year high close to $1.20 in thin trade on Monday, extending gains made at the end of last week after the head of the European Central Bank held back from talking down the buoyant currency.

A public holiday in global foreign exchange capital London kept the market subdued, with most currencies trading in narrow ranges.

By 0740 GMT, the euro was up 0.1 percent at $1.1926, having touched $1.19665 in Asian trade, its highest since January 2015. It was on track for a sixth straight month of gains against the dollar – its best run in five years.

The common currency surged about 1 percent on Friday after ECB President Mario Draghi made no mention of the euro’s strength at the Jackson Hole conference in Wyoming, focusing instead on subjects such as global trade.

“This is about what he did not say,” said Commerzbank currency strategist Esther Reichelt, in Frankfurt. “He does not seem to be overly concerned with the current euro levels, which is the market’s justification to move the euro higher.”

The euro was also boosted by Federal Reserve Chair Janet Yellen’s not mentioning U.S. monetary policy. Markets are currently only pricing in one rate hike by the end of next year, Reichelt said.

“The market’s view was confirmed, which justifies a bit more dollar weakness,” she added.

The euro was broadly expected to remain firm, at least in the short term, with investor focus on the ECB – which meets next week – and whether it announces plans to reduce debt-buying at its September policy meeting.

The dollar index – which tracks the greenback against six major rivals – fell to as low as 92.372, its weakest since early May 2016, before recovering a little to trade down 0.3 percent at around 92.489.

Imre Speizer, Westpac markets strategist, said Tropical Storm Harvey, which has caused catastrophic flooding in Texas, was likely to further weigh on the U.S. dollar because it was “a major negative weather event” and “obviously bad for the economy”.

The greenback slipped 0.3 percent against the safe-haven Japanese yen at 109.155 yen, clear of the four-month low of 108.605 touched on Aug. 18.

The pound was flat at $1.2895 after briefly touching a 13-day peak of $1.2946.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=

Additional reporting by Shinichi Saoshiro in Tokyo and Ana Nicolaci da Costa in Wellington; Editing by Richard Balmforth

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