* US dollar index <.DXY> near 3-year low
* Swiss franc at record high vs USD, helped by SNB comments
* Month-end flows seen tilted toward dollar selling
(Updates prices, adds quotes and graphics, changes byline and dateline; previous LONDON)
By Julie Haviv
NEW YORK, April 29 (Reuters) - The U.S. dollar neared a three-year low against a basket of currencies on Friday and the euro is seen reaching $1.50 as the Federal Reserve is expected to maintain its easy money policy while the European Central bank raises interest rates.
Higher interest rates in Europe compared to the U.S. have undermined support for the U.S. dollar, pushing up the euro by 11 percent so far this year.
"There is no fundamental reason for investors to buy dollars aside from the possibility that it is now undervalued," Kathy Lien, director of currency research at GFT Forex in New York said.
The euro was buoyed by stronger than expected euro zone inflation data that increased the chance of another European Central Bank interest rate rise sooner rather than later. [ID:nBRLTFE7E0]
The euro last traded at $1.4858
Resistance was expected at $1.4906, a peak from Dec. 7 2009, ahead of a substantial barrier at $1.5000. Beyond $1.5000, the key target was the 2009 high of $1.5145.
In U.S. econmic data on Friday showed the U.S. consumer spending rose as households stretched to cover the higher cost for food and gasoline as inflation posted its biggest year-on-year rise in 10 months. For details, double-click on [ID:nN29101956] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For graphic on U.S. personal consumption: http://r.reuters.com/kak39
Fed funds rate hike expectations: http://r.reuters.com/xyz48r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
The U.S. dollar index <.DXY>, which tracks its performance against a basket of major currencies, fell 0.2 percent to hit 72.984, just shy of a three-year low of 72.871 plumbed on Thursday.
Nevertheless, based upon the price action in the foreign exchange market, there are some initial signs that the dollar may be reaching a bottom, GFT Forex's Kathy Lien said.
"From a purchasing power parity perspective, the dollar is undervalued against every major currency with the trade weighted index now approaching its lowest level since before the Plaza Accord in the 1980s," she said.
"The recent extremeness of the dollar's move could attract value hunters but with a number of key event risks next week posing a threat to the U.S. dollar, we don't expect a material recovery."
Next week the U.S. Labor Department will published the monthly U.S. payrolls and unemployment data.
However, analysts at Citigroup said dollar bearishness should persist.
"It is hard to be optimistic on the USD's long-term prospects, given the Fed's ability to surprise on the dovish side, the ongoing overhang of US dollar assets among reserve managers, and the concerns that have emerged on long-term US fiscal prospects," CitiFX said in a research note.
"Moreover in the very short term our month-end model points to additional US dollar selling at month end for hedge rebalancing purposes, so there is the risk that investors will be even shorter US dollar within a couple of days."
International currency trade was thinned by the London holiday for the United Kingdom's royal wedding.
Meanwhile, the Swiss franc was buoyed by upbeat comments from the Swiss National Bank's chairman and an above-forecast Swisssentiment survey. For details, double-click on [ID:nLDE73S0I0]
The Swiss franc rose around 0.8 percent on the day to hit a record high of 0.8653 francs per dollar
Against the yen, the dollar was down 0.1 percent at 81.44 yen
(Additional reporting by Jessica Mortimer in London)