FOREX-Dollar briefly turns higher vs euro as gold drops

NEW YORK, March 19 (Reuters) - The dollar briefly reversed losses against the euro on Wednesday in volatile trading, drawing support from losses in gold futures.

The euro was now at $1.5637, recovering from a dip to $1.5604 <EUR=> as gold declined.

Gold futures, on the other hand, fell as much as 6 percent to trade just above $940 per ounce, hurt by heavy liquidation of funds.

"There has been a large unwinding of commodities in gold especially as some market participants favour the Fed's action to date," said a London trader.

"Hedge funds have been unwinding good profit-making positions, including long euros," he added. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Theodore d'Afflisio)