(Updated at 1430 EDT)

By Karen Brettell and Alun John

NEW YORK, March 28 (Reuters) - The dollar gained on the

euro on Thursday before key U.S. inflation data due on Friday

and as investors squared positions for month- and quarter-end.

The Japanese currency was also modestly weaker at 151.38 per

dollar having traded just shy of the 152 mark at its weakest

since 1990 on Wednesday before Japan's top monetary officials

suggested they were ready to intervene to prevent further

declines.

This week's main U.S. economic focus is Personal Consumption

Expenditures (PCE) data due on Friday, which will come after

hotter than expected consumer and price inflation releases for

January and February.

Traders will look for any new clues on whether the Federal

Reserve remains on track to cut rates as soon as June as

inflation remains sticky and economic growth stays strong.

Helen Given, FX trader at Monex USA, said that higher than

expected inflation so far this year is unlikely to last, which

should keep the Fed on pace for three 25 basis points cuts this

year.

The dollar rallied earlier on Thursday following comments

from Fed Governor Christopher Waller late on Wednesday that

recent disappointing inflation data affirms the case for the

U.S. central bank holding off on cutting its short-term interest

rate target.

But Given said that move was "a little bit outsized and I

think its really to do with the fact that there's just slim

flows across the world."

U.S. Treasuries and stock markets will be closed for the

Good Friday holiday and foreign exchange markets are likely to

be lightly staffed, which may increase volatility.

Fed Chair Jerome Powell is also due to speak on Friday.

Data on Thursday showed that the U.S. economy grew faster

than previously estimated in the fourth quarter, lifted by

strong consumer spending and business investment in

nonresidential structures such as factories.

The euro reached $1.0775, its lowest in five

weeks, and was last down 0.34% at $1.0789. The pound

weakened 0.15% to $1.262.

The dollar index rose 0.1% to 104.52, after earlier touching

104.73, its highest since mid-February.

INTERVENTION WATCH

Should the inflation data on Friday surprise on the upside

and support the dollar, its most dramatic impact could be on the

yen. Market participants say there is a dense thicket of options

restricting moves in dollar/yen around the 152 level, and so a

breakthrough could trigger more significant moves.

"Once dollar/yen touches 152, I think there will probably be

a sharp move upward, and that's when intervention could take

place," Takeshi Ishida, a currency strategist at Resona

Holdings, said.

Japanese authorities held a meeting on Wednesday on the

currency's weakness and ramped up their verbal warnings, putting

the market on the lookout for any signs that words are being

backed up with action.

Japanese Prime Minister Fumio Kishida also said on Thursday

the government will not rule out any options in addressing

excessive moves in the currency market, stressing Tokyo's

resolve to step into the market if it sees the yen's fall as

overdone.

"Each time that currency officials in Japan have talked

about this, it's had less and less of an impact on yen pricing,"

Given said. "Because of that we are now looking at a real

tangible intervention risk."

Japan intervened in the currency market three times in 2022,

selling the dollar to buy yen, first in September and again in

October as the yen slid towards a 32-year low of 152 to the

dollar.

A summary of opinions at the Bank of Japan's March meeting

released last Thursday gave the currency little support, showing

many policymakers saw the need to go slow in phasing out

ultra-loose monetary policy.

Meanwhile, China's central bank set the yuan fixing at the

widest gap against Reuters' estimate in nearly five months, as

authorities step up efforts to prevent sharp declines in the

currency. The yuan slumped to a four-month low last Friday. CNY/

The onshore yuan was mostly flat at 7.2256 per dollar,

while offshore it weakened to 7.2615 per dollar.

The Australian dollar fell as low as $0.6486, the

weakest since March 5. As well as being hurt by Waller's

remarks, data from Australia showed retail sales came in below

economists' expectations in February. AUD/

In cryptocurrencies, bitcoin gained 2.91% to

$70,848.75.