* Dollar index heads for first weekly gain since mid-Sept
* FX Concepts see euro topping out between $1.43-$1.45
* Geithner urges G20 not to use FX for economic advantage (Updates prices, adds detail, comment)
By Wanfeng Zhou
NEW YORK, Oct 22 (Reuters) - The dollar was on track on Friday to snap a five-week losing streak against major currencies on uncertainty ahead of the outcome of a meeting of global finance ministers and as the euro repeatedly ran into resistance above $1.40.
Extreme bets against the greenback also prompted investors to moderate their dollar selling. The dollar .DXY has lost some 7 percent against a basket of major currencies during a five-week swoon. It was up 0.6 percent this week, on pace for its first weekly gain since mid-September.
Currency speculators further reduced bets against the U.S. dollar in the week ended Tuesday, data from the Commodity Futures Trading Commission showed, with the value of net short U.S. dollar positions down to $25.8 billion from $29 billion. See [ID:nN22197145]
Once a G20 meeting on currency imbalances is out of the way the greenback will fight an uphill battle, analysts said.
The Federal Reserve is widely expected to announce more monetary easing next month, likely through buying U.S. Treasury debt. The direct purchases would pressure U.S. bond yields and further diminish the return on dollar-denominated assets.
"Once we get past the G20 event, we're going to have that renewed focus on what's going on with the U.S. quantitative easing and another down leg in the U.S. dollar," said David Watt, senior currency strategist at RBC Capital Markets in Toronto. "There's the possibility of a renewed upswing in the euro."
The euro EUR= was last little changed at $1.3935, off a session peak of $1.3973, according to trading platform EBS. The euro is up 9 percent against the dollar since September, though it has failed to hold ground on several occasions above $1.40.
Near-term resistance comes in at last week's high of $1.4161, which is followed by $1.4376, the 76.4 percent retracement of the euro's fall from November to June.
G20 finance and central bank chiefs meet on Friday and Saturday in South Korea, and a G20 source said officials were unlikely to reach an accord rejecting currency devaluations and capping current account balances, after U.S. proposals ran into stiff opposition. See [ID:nLDE69L0JA]
A failure to reach agreement could free traders to keep selling dollars in favor of the euro, emerging market and commodity-linked currencies, such as the Australian dollar.
"A new currency accord will be hard to achieve in principle and even harder to push through in practice over the hurdles of domestic political pragmatism," said Lena Komileva, head of G7 market economics at Tullett Prebon.
EURO NEAR PEAK?
Interest rate spreads have continued to move in favor of the euro in recent days, with U.S. yields falling as yields on German government debt rise. The move was driven in part by expectations that euro-zone countries are planning to tighten policies, even as the Fed is set to ease further.
But eventually growth differentials may shift in the dollar's favor if Fed policy perks up the economy in early 2011, just as euro-zone governments begin to slash spending and raise taxes to get public spending in order.
John Taylor, chief investment officer of FX Concepts, expects the euro to peak between $1.43 and $1.45 and says it could sink to parity with the dollar in 2011. [ID:nN22169755]
"I just don't see all this bullishness on the euro. I don't think talk about exit strategies from the (European Central Bank) is right," said Taylor, who oversees the world's largest currency hedge fund with about $8.5 billion under management.
Some traders said the euro will likely stay in its recent range of between $1.3650 and $1.4150 in the near term as investors wrestle with uncertainty over the size of expected U.S. monetary easing program.
Mark McCormick, strategist at Brown Brothers Harriman in New York, said the euro's five-day and 20-day moving averages against the dollar are converging, a bearish short-term sign. Traders also said a weekly close below $1.3929, the euro's 200-week moving average, would signal dollar gains.
The dollar was flat at 81.34 yen JPY=, not far from a 15-year low of 80.84 yen set earlier this week. (Additional reporting by Gertrude Chavez-Dreyfuss and Steven C. Johnson; Editing by Andrew Hay)