* US dollar sags under weight of global imbalances pre-G20
* Fed outlook also weighs on dollar, euro at 1-year high
* Market sentiment firmly to sell dollars on any rally
(Updates prices, adds comment, detail)
By Steven C. Johnson
NEW YORK, Sept 22 (Reuters) - The U.S. dollar slid to a one year low against the euro on Tuesday around $1.48 as deteriorating sentiment toward the U.S. currency encouraged dealers to sell it ahead of a Federal Reserve meeting and Group of 20 summit this week.
Traders took advantage of a dollar rally the prior session to resume selling on Tuesday on the view that the Fed will signal plans to maintain loose monetary policy well into 2010.
Currency investors are also bracing for G20 leaders to discuss rebalancing of the global economy this week, a process that would almost certainly require a weaker dollar.
A document obtained by Reuters showed how Washington would urge G20 leaders 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]
"If you take the view that too much of U.S. growth has been domestically-driven, the next logical step is to say an orderly decline of the dollar -- it's not in anyone's interest to see a collapse -- in many ways makes sense," said Tom Fitzpatrick, chief technical analyst at Citigroup in New York.
"And at the end of the day, the U.S. has a zero interest rate policy and the highest fiscal deficit in peacetime while (foreign investors) are holding a lot of dollars, so the path of least resistance for the dollar is down," he added.
The euro was up 0.8 percent at $1.4794
Sterling rose 1.0 percent to $1.6375
With no major economic data on the calendar, traders said $1.4825 may be the next target in euro-dollar, with many predicting an eventual move back to $1.50.
"Every time we get to a round number in euro-dollar, we'll probably try to chip away on the way to $1.50, but for now $1.4825 is the next line in the sand, and then we'll have to wait and see about $1.49," said Steven Butler, head of FX trading at Scotia Capital in Toronto.
DOLLAR IN FOCUS AT G20?
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 was a green light to push it even higher, especially in light of the U.S. proposals to put fixing global imbalances on the G20 agenda in Pittsburgh this week.
But others said there is still a risk of dollar bearishness engulfing the market and selling turning into a rout.
"A discussion at the G20 on currencies, and especially the dollar, is not only appropriate but essential, as this move could accelerate swiftly," said Maurice Pomery, managing director at Strategic Alpha in London.