(Updates prices, adds comment)
* Dollar hits 110.58 yen, highest in over 3 weeks
* Markets taking likelihood of Fed rate hike more seriously
* Dollar dips vs euro after hitting over 7-week high Thurs.
By Sam Forgione
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 edged lower 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. analysts 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.
"This week's adjustment in Fed monetary policy expectations, or expectations of future interest rate hikes, helped U.S. Treasury yields move higher," said Eric Viloria, currency strategist at Wells Fargo (NYSE:WFC) in New York.
He said the rise in Treasury yields on Friday, combined with falling Japanese government bond yields, boosted the dollar against the yen.
Expectations for a hawkish Fed failed to buoy the dollar against the euro over the session. 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 was last up 0.14 percent against the dollar at $1.1218 EUR= , but remained on track for its third straight weekly decline against the dollar. 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.
Lien said that, in addition to profit-taking in the dollar ahead of the weekend, investors likely bought the euro 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 0.04 percent at 95.332 .DXY . The index was set for its third straight weekly gain, of about 0.8 percent.
The dollar was last up 0.25 percent against the yen at 110.22 yen. The dollar was last mostly flat against the Swiss franc at 0.9905 franc after hitting a more than 10-week high of 0.9925 franc earlier on Friday.