* Dollar index heads for first weekly gain since mid-Sept
* Euro struggles at resistance $1.40
* 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, changes byline)
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.
Finance and central bank chiefs from the Group of 20 rich and emerging nations 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]
Analysts said once the G20 meeting is out of the way, the dollar still will fight an uphill battle, with the Federal Reserve widely expected to announce more monetary easing next month, likely through direct purchases of U.S. Treasury debt.
"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
Analysts said a failure to reach agreement would 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.
The dollar was up 0.1 percent at 81.45 yen
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.
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.
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.
"Once austerity measures take effect in Europe, the economy may contract relative to the U.S., a headwind for the euro," said Mark McCormick, strategist at Brown Brothers Harriman in New York.
McCormick 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.
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. (Additional reporting by Gertrude Chavez-Dreyfuss and Steven C. Johnson; Editing by Padraic Cassidy)