FOREX-Dollar tumbles against euro, rallies against peso on U.S. election jitters

(Updates prices, adds comments; changes byline, dateline, pvs LONDON)

* Dollar dips against yen, hits more than 2-week low vs euro

* Mexican peso hits more than 3-week low vs dollar

* Traders await Fed statement due on Wednesday

* Dollar index hits 12-day low on U.S. political uncertainty

By Sam Forgione

NEW YORK, Nov 1 (Reuters) - The U.S. dollar hit its lowest level in more than two weeks against the euro on Tuesday on U.S. political uncertainty, while the Mexican peso hit a more than three-week low on positioning for a potential victory for Republican presidential candidate Donald Trump.

News (Other OTC: NWSAL - news) on Friday that the FBI was probing newly found emails related to U.S Democratic presidential candidate Hillary Clinton's use of a private server continued to shake traders' confidence in the outcome of the Nov. 8 election.

Clinton is viewed as the candidate of the status quo, while there is greater uncertainty over what a victory for Trump might mean for U.S. foreign policy, international trade deals and the domestic economy.

Analysts said a Trump victory could throw the Federal Reserve off its presumed course of hiking interest rates in December. Investors awaited Wednesday's Fed statement for any new indications that a rate increase is likely at the U.S. central bank's December meeting.

"The market has built up some dollar longs and euro shorts in recent weeks, and with Friday's news increasing the uncertainty around the election outcome, we suspect market participants are cutting back" on those positions, said Vassili Serebriakov, FX strategist at Credit Agricole (Swiss: ACA.SW - news) in New York.

The dollar index, which measures the greenback against a basket of six major rivals, fell more than 0.5 percent to its lowest level since Oct (HKSE: 3366-OL.HK - news) . 20 at 97.878. The index had gained 3.1 percent in October to mark its strongest month in just under a year.

The euro gained about 0.6 percent against the dollar to a more than two-week high of $1.1046. The dollar fell about 0.9 percent against the Swiss franc to a more than three-week low of 0.9797 franc and dipped about 0.3 percent against the yen to a session low of 104.52 yen.

The Mexican peso fell about 1.3 percent against the greenback to 19.1102 pesos per dollar, its weakest level since Oct. 7.

A potential Trump victory has been viewed as a key risk for the Mexican currency given Trump's promises to clamp down on immigration and rethink trade relations.

"With (Other OTC: WWTH - news) dollar/Mex outperforming today, it highlights how markets are rethinking the election outcome and not ruling out a Trump presidency," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, on the dollar's acceleration against the peso. (Reporting by Sam Forgione; Editing by Meredith Mazzilli)