* Euro/dollar trades quietly before Fed policy minutes
* Yuan further buoyed by trade talk hopes
* Yen loses more ground to dollar after BoJ comments
* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, Feb 20 (Reuters) - China’s yuan rose on Wednesday after the United States pressed Beijing to prevent sharp weakening of its currency as part of any trade deal, while the dollar paused as traders positioned ahead of the release of Federal Reserve policy minutes.
The yuan has been a strong performer in 2019, helped by the recovery in emerging market assets broadly and optimism that Washington and Beijing are close to agreeing a deal to end their trade conflict.
In offshore markets, the yuan rose 0.4 percent to as strong as 6.7195, its best level since Feb. 1.
The dollar, measured against a basket of currencies, held steady at 96.501.
The dollar index rose to a two-month high last week but demand for the liquid greenback has ebbed on optimism that a fresh round of talks between China and the United States would help resolve their trade conflict.
The euro nudged higher to $1.1350 but was struck within recent ranges - the single currency has struggled this month as worries about the state of the euro zone economy grow.
Analysts at ABN AMRO’s Georgette Boele said the bank had downgraded its euro forecasts for 2019 because of economic concerns.
“However, we also expect limited downside in the euro, because weaker-than-expected euro zone data have had only a limited negative impact on the euro, suggesting that most of the weakness is reflected in the price,” she said.
The benchmark 10-year U.S. Treasury yield fell sharply to an 11-day low on Tuesday ahead of the Fed meeting minutes, which are due later on Wednesday, further dampening demand for the dollar.
The minutes from the January Fed meeting will be closely watched following a dovish statement at that review.
“The dollar is weighed with Treasury yields on a downturn. Attempts by participants to price in potentially dovish FOMC (Federal Open Market Committee) meeting minutes are also keeping the dollar on the defensive,” Yukio Ishizuki, senior currency strategist at Daiwa Securities, said.
Elsewhere, the yen fell another 0.3 percent against the dollar to 110.95
The yen had taken a hit on Tuesday after Bank of Japan Governor Haruhiko Kuroda said the central bank was ready to ramp up stimulus if sharp yen rises hurt the economy.
Sterling slipped back 0.2 percent but held well above $1.30 following Tuesday’s surge on hopes Prime Minister Theresa May can make progress in Brussels on Wednesday as she tries to tweak her Brexit withdrawal agreement. (Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Alison Williams)