* Fears of U.S./China trade spat hits commodity currencies
* Euro gains on falling bond yields, tightening spreads
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
LONDON, Aug 2 (Reuters) - The U.S. dollar was steady on Wednesday, halting a recent losing streak as investors extended an unwinding of short bets on the currency, particularly against the New Zealand and the Canadian currencies.
Fears of a trade spat between China and the U.S. have also hit the commodity-linked units which have seen heavy inflows this year. The euro was the only notable exception to the broad dollar strength in early trades.
U.S. President Donald Trump is close to a decision on how to respond to what he considers China's unfair trade practices, a senior Trump administration official said on Tuesday.
The dollar index against a basket of major currencies was broadly flat at 92.96 in early trades. On Tuesday, it hit its lowest level in 15 months at 92.777.
The euro was 0.3 percent stronger at $1.1837 holding below a 2-1/2-year peak of $1.1846 set the previous day.
In contrast to the political risks and monetary policy uncertainty that have plagued the dollar, the common currency has drawn support from expectations that the European Central Bank would eventually begin phasing out its easy policy.
While the euro has been a star among its G10 peers this year, gaining more than 12 percent against the dollar with most of its gains coming in the last three months, some investors are growing cautious about the single currency's strength.
"Our European strategists advise selling the euro on rallies as they believe the ECB hawkish expectations priced into the market may be premature," said Sue Trinh, head of Asia FX strategy at RBC Capital Markets in Hong Kong.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.bi z / c m s / ? p a g e I d = l i v e m a r k e t s (Reporting by Saikat Chatterjee; Additional reporting by Shinichi Saoshiro in TOKYO)