* Big week for policy meetings begins with ECB
* Dollar up vs euro on safe-haven demand
* Swiss franc reaches two-year high, pulls back
By Tommy Wilkes
LONDON, July 22 (Reuters) - Foreign-exchange markets startedthe week waiting to see how much and how fast policymakers mightease policy, beginning with the European Central Bank onThursday.
The euro weakened to $1.12 in Asian trading as the dollargained on safe-haven demand amid rising tensions in the MiddleEast.
Positioning data published last week showed that investorsremain net long of dollars, unchanged from the previous week.
Foreign exchange has been stuck in trading ranges in recentweeks, with expectations for easing by both the Federal Reserveand the ECB more or less cancelling out the impact on the euroand the dollar.
Pricing for a 50-basis-point Fed cut soared last week aftera dovish speech by New York Fed President John Williams. Thoseexpectations later dwindled after a Fed spokesman clarified thatthe remarks did not refer to "potential policy actions".
Priced-in forecasts for a 50-basis-point cut have droppedfrom as high as 71% last week to 18.5% on Monday. FEDWATCH
The Fed holds its monetary policy meeting next week, as doesthe Bank of Japan.
"FX markets don't tend to get too excited about monetarypolicy when it's all nuance and forward guidance, but whencentral banks are making actual rate moves and QE adjustments,monetary policy becomes the driving theme," BMO Capital Marketsstrategist Stephen Gallo said.
The euro nudged lower to $1.1217EUR=EBS after earlierreaching $1.1208 in Asian trading. The dollar index rose 0.1%to 97.199 .DXY .
Analysts said the dollar was benefiting from a confrontationin the Strait of Hormuz, the oil trade's most importantwaterway. Footage showed the Iranian military defying a Britishwarship to seize a tanker on Friday. urn:newsml:reuters.com:*:nL8N24M03O
The dollar rose 0.2% against the yen to 107.91 JPY=EBS after earlier breaching the 108 level.
The Swiss franc pulled back after rising to another two-yearhigh against the euro. By 0730 GMT, it had shed 0.1% to 1.1023 EURCHF=EBS after earlier plumbing 1.1013 francs per euro.
Sterling dipped below $1.25, losing 0.2% to $1.2483GBP=D3 as investors waited to see whether Boris Johnson would win theConservative party leadership contest, as expected.
"We're likely to be marking time ahead of those big riskevents later in the week," National Australia Bank FX StrategistRodrigo Catril said. "The market is still licking its woundspost Fed Williams' backtracking." (Additional reporting by Tom Westbrook in Sydney, editing byLarry King) ((email@example.com))