(Updates prices, adds comments; changes byline, dateline, pvs LONDON)
* Dollar hits 110.58 yen, highest in over 3 wks
* Markets taking likelihood of Fed rate hike more seriously
* Dollar pauses vs euro after hitting over 7-wk high Thurs.
By Sam Forgione
NEW YORK, May 20 (Reuters) - The U.S. dollar hit its highest level against the yen in more than three weeks on Friday on expectations of a potential summer Federal Reserve interest rate hike, while the dollar was little changed against the euro after profit-taking.
The dollar hit 110.58 yen, its highest level against the Japanese currency since April 28. Analysts said minutes from the Fed's April meeting released Wednesday indicating a June rate hike was firmly on the table were still supporting the dollar. also said it was unlikely that Group of 7 countries would reject potential Japanese plans to weaken the yen at a G7 meeting of finance leaders this weekend in Sendai, Japan.
"The majority of the move is the aftermath of the FOMC minutes," said Alfonso Esparza, senior currency strategist at Oanda in Toronto. "The gap between what the Fed says and what the Fed does seems to be shrinking," he said on traders' increased expectations that the U.S. central bank could increase interest rates this summer.
Expectations for a hawkish Fed failed to buoy the dollar against the euro. Analysts said traders took profits from the dollar's rally against the euro after the euro fell to a more than seven-week low against the greenback of $1.1178 on Thursday.
The euro remained on track for its third straight weekly decline against the dollar, while the dollar was on track for its third straight weekly gain against the yen.
"It is a tad worrisome that the momentum seems to be waning a little bit in the greenback" against the euro, said Kathy Lien, managing director at BK Asset Management in New York.
She said that, in addition profit-taking in the dollar ahead of the weekend, the euro likely gained support ahead of next week's European economic data releases. She said that data, which will include manufacturing reports, could push the euro higher.
The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.15 percent at 95.433 .DXY .
The dollar was last up 0.52 percent against the yen at 110.52 yen, just below its more than three-week high against the currency. The dollar was up 0.11 percent against the Swiss franc, just below a more than 10-week high of 0.9922 franc hit earlier Friday.