September 26, 2019 / 2:22 PM / 8 months ago

FOREX-Dollar eases after Wednesday's big jump; euro recovers ground

* Dollar eases but remains near recent highs

* New Zealand dollar rises on central bank comments

* Graphic: World FX rates in 2019 (New throughout, updates rates and adds comments post-U.S. market open; new byline, changes dateline, previous LONDON)

By Saqib Iqbal Ahmed

NEW YORK, Sept 26 (Reuters) - The dollar edged lower against the euro on Thursday, giving up some of the sizeable gains from the previous session, as the common currency recovered a little after sinking to a 28-month low amid an increasingly bleak euro zone economic outlook.

Increased political tensions on both sides of the Atlantic - an unfolding effort by U.S. congressional Democrats to impeach President Donald Trump and ongoing uncertainty linked to Britain's divorce from the European Union - was, however, likely to keep the greenback in demand, analysts said.

The euro was 0.16% higher against the dollar at $1.0959, after falling as low as $1.0923, its weakest since May 2017.

Despite the opening of an impeachment inquiry into U.S. President Donald Trump this week and mixed signals on a trade deal, the dollar has remained resilient. It has been in demand both as a safe-haven when investors become nervous, and also when a deal with China - and a boost to the global economy - seems within reach.

The U.S. dollar remains king and the barrage of headlines from all over the map have only served to solidify that stance, Brad Bechtel, global head of FX at Jefferies, said in a note.

The dollar index, which measures the greenback against a basket of other currencies, was down 0.16% at 98.874. Earlier this month it hit a high of 99.37, its strongest since May 2017.

On Wednesday the index jumped 0.7%, its largest one-day rise in about three months.

"While there's no single reason to explain the dollar's strength, multiple factors are in play," said Hussein Sayed, analyst at broker FXTM.

"The UK is facing a political crisis with Brexit, the euro zone is near a recession, bond yields across the developed economies remain very depressed, and investors want a safe place to park their money," he said.

"Despite the impeachment drama, the U.S. dollar continues to cement its place as the major safe haven currency," he added.

Against the Japanese yen, which attracts investors in times of uncertainty, the greenback fell 0.25% after the U.S. House Intelligence Committee released a declassifed version of a whistleblower report alleging that President Trump used his office to solicit interference in the 2020 presidential election from a foreign country.

Meanwhile, the New Zealand dollar gained 0.73% after the country's central bank governor said it was unlikely he would need to use unconventional monetary policy.

Sterling recovered from a sharp dive on Wednesday to trade unchanged on the day, even as investors waited for parliament's next step to break the Brexit impasse and as opposition leaders gathered to discuss tactics.

Editing by Larry King and Kirsten Donovan

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