* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Tracking the coronavirus https://tmsnrt.rs/3aIRuz7
* Euro draws fire as focus shifts to economic outlook
* Pound slips on worries about relations with EU
* Virus still a worry as traders try to measure impact
By Stanley White
TOKYO, Feb 18 (Reuters) - The euro traded near a three-year low versus the dollar ahead of a highly watched German survey on Tuesday, which is expected to show a sharp slump in investor confidence and fuel growing pessimism about the outlook for Europe's largest economy.
Financial markets clung to tight ranges following a U.S. public holiday on Monday, shifting the investor focus to European news and developments in the coronavirus crisis.
Sterling nursed losses against the dollar and the euro due to lingering worries about economic ties between Britain and the European Union as both sides laid out conflicting views on how to proceed with trade negotiations.
In Asia, the Chinese yuan and the Japanese yen held steady as traders assessed the spread of an outbreak of a new coronavirus both inside and outside China.
Sentiment for the euro has worsened dramatically this month after weak manufacturing and gross domestic product data from Germany, Europe's largest economy, suggests that the euro zone is more vulnerable to external shocks that previously thought.
"The euro is close to testing an important support level at $1.08 due to the diverging economic outlook between the euro zone and the United States," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.
"It looks a little oversold, so in the very short term there could be a bounce, but the euro's fundamentals still point more to the downside."
The euro was quoted at $1.0836 in Asia, close to its lowest since April 2017.
Since the start of February, the single currency has lost 2.3% versus the greenback as disappointing economic data raised concerns that euro zone monetary policy will have to remain accommodative for much longer.
The euro's next hurdle is the release of Germany's ZEW survey later on Tuesday, which is forecast to show economic sentiment slipped from the highest since July 2015.
The pound held steady at $1.3003 in Asia on Tuesday following a 0.3% decline in the previous session. Sterling was quoted at 83.30 pence per euro, nursing a 0.4% decline on Monday.
Prime Minister Boris Johnson's Europe adviser David Frost said on Monday Britain will not be threatened into following EU rules to win a free trade agreement with the bloc.
Frost's comments are in contrast with those of European Commission President Ursula von der Leyen, who has called on Britain to guarantee fair competition based on ambitious environmental and labour standards.
Britain left the EU last month and the two sides will now start negotiating a new relationship from trade to security.
Elsewhere in the currency market, the offshore yuan held steady at 6.9882 per dollar after China's Hubei province, considered the epicentre of the coronavirus outbreak, said new cases of the illness fell slightly to 1,807 on Monday from 1,933 the previous day.
However, currency markets are increasingly likely to react to new data on the virus cautiously given uncertainty about the actual number of cases and difficulties in estimating when the epidemic will peak.
The yen, which initially gained on safe-haven flows as the outbreak unfolded last month, held steady in a narrow range at 109.82 per dollar.
The Australian dollar fell 0.22% to $0.6702 after minutes from the Reserve Bank of Australia's first meeting of the year showed policymakers discussed easing policy.
The RBA kept rates unchanged at an all-time low of 0.75% at that meeting, but the minutes showed central bankers are prepared to ease policy further if needed.
The New Zealand dollar was little changed at $0.6436.
The antipodean currencies have been buffeted by the virus due to Australia's and New Zealand's extensive trade ties with China, with commodities, tourism and education especially vulnerable. (Reporting by Stanley White; Editing by Sam Holmes)
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