* Dollar still under pressure, just off lows
* But trading seen subdued with holidays in UK, Japan
* Month-end flows seen tilted toward dollar selling
By Jessica Mortimer
LONDON, April 29 (Reuters) - The dollar held near a three-year low against a basket of currencies on Friday and was on track for its biggest weekly fall since mid-January, with more losses possible due to month-end demand to sell dollars.
The dollar index <.DXY> was down 0.1 percent, keeping the euro near the previous day's 17-month high and on track to vault $1.50, while the Australian dollar hovered close to its 29-year peak against the greenback.
The dollar was sold heavily after the Federal Reserve made clear to markets on Wednesday it was in no hurry to change its ultra-loose monetary policy, although traders said volumes were thin due to holidays in the UK and Japan and could limit moves.
"The dollar remains under pressure, but it has been a very fast move and it can be difficult to extend a move like that," said Carl Hammer, currency strategist at SEB in Stockholm.
"If the euro can break above a crucial level around $1.5140 then the pattern is constructive for a substantial move higher".
The euro was expected to meet resistance ahead of a reported options barrier at $1.4900, while the Aussie was likely to need strong momentum to lift it through large barriers at $1.10.
The dollar index, which tracks its performance against a basket of major currencies, was down 0.1 percent at 73.052, having plumbed a three-year low of 72.871 on Thursday.
It is down around 1.4 percent this week, on course for its biggest drop since a 2.5 percent fall in the week to Jan. 16.
The euro edged up 0.1 percent to $1.4840
Beyond $1.5000, the key target was the 2009 high of $1.5145.
Flash estimates of euro zone inflation for April due at 0900 GMT could support the euro. They are expected to show inflation remaining elevated at 2.7 percent year-on-year, adding weight to expectations of further euro zone interest rate hikes.
The Australian dollar
MONTH-END FLOWS
Analysts and traders said the dollar could face selling pressure during the day, as investors tweak their portfolios at the end of the month, with flows biased towards dollar selling.
Compared with the steep falls against other currencies, the dollar has held up reasonably well versus the yen in the past few sessions. It last traded at 81.57 yen
"The signal to sell the USD against JPY is particularly strong, as Japanese equities continued to underperform their global counterparts," analysts at Citi said in a research note, referring to their FX hedge rebalancing model.
Month-end portfolio rebalancing can spur buying of currencies that saw their asset markets underperform against global peers during the month, and vice versa.
Japanese shares have slid since last month's tsunami and earthquake. MSCI's index of Japanese equities is down 1.7 percent in April <.MIWD00000PUS>, lagging well behind a 3.5 percent rally in MSCI's index of global shares.
A trader for a major Japanese bank in Singapore said the yen may eventually come back under pressure against the dollar once market players start re-focusing on weakness in Japan's economy and the extent of the damage caused by the earthquake.
Trading was subdued with Japanese financial markets shut for a public holiday and UK markets closed for a royal wedding.
(Additional reporting by Ian Chua in Sydney and Asia Forex team)