* U.S. central bank to start two-day policy meeting
* Dollar down 1.3 pct over last 10 sessions
* Aussie trims gains after RBA minutes
* Graphic: World FX rates in 2019
(Adds context, graphics, updates prices)
By Tom Finn
LONDON, March 19 (Reuters) - The Japanese yen rose on Tuesday,
benefiting from a U.S. dollar hit by concern over the U.S. economy and
expectations that the Federal Reserve will prove accommodative at a
meeting this week.
The euro also profited from the weaker dollar, adding 0.2 percent
to $1.1348 .
Markets expect the Fed to strike a dovish tone when it meets, and
bets on an interest rate cut have increased after weaker-than-expected
manufacturing data on Friday.
The U.S. currency, measured against a basket of rivals, has
weakened 1.3 percent in the last 10 days. On Tuesday, it fell 0.2
percent to 96.415
The foreign exchange market has traded in a narrow range this week
as caution prevails among investors ahead of the Fed meeting but the
Japanese yen, Monday's worst performing major currency, has recovered.
The Australian dollar has gained the most from the U.S.
dollar's retreat though it was hit by Reserve Bank of Australia
minutes that expressed concern about the housing market.
The New Zealand and Canadian dollar are also performing
"Assuming Washington does not turn more aggressive on trade
in the near future, expect this more benign environment to continue
and to allow local stories to win through ... ," ING analysts said.
Volatility in foreign exchange markets is at its lowest in five
years and analysts say recent decisions by the Fed and other major
central banks is contributing.
The broader theme for foreign exchange markets in recent days has
been oil, with the Mexican peso and the Russian rouble - both
outperforming oil exporters - among the best performing currencies.
The Norwegian crown is a notable exception in that regard as
bullish bets are being trimmed ahead of Thursday's Norges Bank meeting.
Sterling gained, rising 0.4 percent to $1.3311. It had fallen
overnight after the speaker of Britain's parliament upended Prime
Minister Theresa May's Brexit plans by ruling that she had to change
her twice-defeated deal before offering it for a third vote.
The Bank of England is expected to leave its interest rate outlook
unchanged at a policy meeting on Thursday because of the uncertainty
over Britain's decision to leave the European Union.
Dollar retreats, yen firms Federal Open Market Committee target
(Additional reporting by Sujata Rao; Editing by Alison Williams)
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