The euro hit a one-year high against a sliding dollar on Tuesday as dealers resumed selling the U.S. currency following its rise the previous day, while markets awaited a Federal Reserve policy decision and Group of 20 summit later in the week.

Negative dollar sentiment resumed, helping to push the euro as high as $1.4822 on trading platform EBS as traders cleared option barriers around the key $1.48 region, while Asian central banks were also seen selling the dollar against the euro.

In a market where there's a dearth of events and data ahead of the Fed in particular, and with stock futures maintaining gains, it's a case of perpetuating dollar selling, said Jeremy Stretch, strategist at Rabobank in London.

Analysts expect the Fed to signal its ultra-loose monetary policy will remain in place well into next year when it announces its policy statement on Wednesday.

The dollar has taken a beating across the board this month, stung by concerns that its status as the world's reserve currency may weaken in the future, and while increasing market risk demand has tarnished its safe-haven appeal.

In addition, G20 leaders are expected to discuss the need to rebalance the global economy, and the prospect that this would inevitably require a weak dollar also dragged the currency down.

A document obtained by Reuters showed how Washington would urge G20 leaders this week to launch a new push this year to get debtor nations like the United States to save more and exporters like China, Germany and Japan to spend more. [ID:nLL725947]

Some in the market said the prospect of such a rebalancing resonated all the more on Tuesday, the 24th anniversary of the Plaza Accord, which resulted in a massive dollar devaluation.

At 1136 GMT the euro was up 0.8 percent on the day at $1.4790 EUR, inching down from the day's high. Against a basket of currencies, the dollar .DXY was down 0.9 percent at 76.12, approaching the one-year low of 76.01 struck on Sept 17.

The dollar fell 0.7 percent against the yen to 91.40 yen JPY on Tuesday and was down 0.9 percent against the Swiss franc at a 14-month low of 1.0217 francs CHF.


In addition to the Fed, the Norwegian central bank will announce its policy decisions on Wednesday, while the Bank of England publishes the minutes of its last policy meeting.

European Central Bank Governing Council member Axel Weber on Tuesday said recent moves in currency markets were not out of line given the euro zone's economic performance relative to other areas. [ID:nLM205927]

Some said this suggested the ECB was comfortable with the euro where it is and a green light to push it even higher.

Still, others pointed to the risk that dollar bearishness engulfs the market, and the selling turns into a rout.

These ideas that the U.S. and Europe can come up with a deal to resolve imbalances is a pipe dream and unworkable, said Maurice Pomery, managing director at Strategic Alpha in London, adding that protectionism from emerging nations in the form of currency intervention was more likely.

A discussion at the G20 on currencies, and especially the dollar, is not only appropriate but essential, as this move could accelerate swiftly, he said.

The New Zealand dollar NZD surged more than 2 percent to a 13-month high against the dollar of $0.7230 rallying after dairy exporter Fonterra raised its estimated payout to farmer shareholders, pointing to stronger global demand and a recovery in dairy prices. [ID:nWEL488566]. (Additional reporting by Jamie McGeever, editing by Ron Askew)