By Elizabeth Howcroft

LONDON (Reuters) – The dollar edged down from its recent 20-year high on Friday but was still on track for its best month since 2015, having been boosted by a combination of expectations for U.S. rate hikes and growth concerns in China and Europe.

In the final trading day of a seismic month for currency markets, major currency pairs pulled back slightly from their recent trajectories as global markets stabilised and investors took profit on dollar gains.

At 1047 GMT, the dollar index was down 0.6% on the day at 102.98, but still set for a 4.8% gain in April.

Weaker-than-expected U.S. growth data on Thursday did little to stop the dollar’s rise, with investors still expecting a 50 basis point rate hike at the Federal Reserve’s meeting next week.

The question for investors is whether or not the dollar’s rise will continue in May, said Jeremy Stretch, head of G10 FX strategy at CIBC.

“We already have huge degrees of tightening priced into the dollar curve – I’m not sure we will be able to meet that scale or scope of Fed tightening,” he said.

This means there is not necessarily justification for adding to dollar holdings which are already “fairly exaggerated,” he said.

But ING FX analysts said in a client note that, even though the dollar is “overbought”, “there will be lots of dollar buyers ready on dips and looking to position for a summer dollar rally as the Fed slams on the monetary brakes.”

As the dollar slipped, other major currencies got a boost, with the euro up 0.6% on the day at $1.05655.

Still, the euro was on track for a 4.5% monthly drop, its biggest fall since 2015.

The euro has lost around 6.6% versus the dollar since Russia’s invasion of Ukraine on Feb. 24, with investors concerned about Europe’s energy security, inflation and growth.

Euro zone inflation rose to 7.5% in April.

Dollar-yen stayed above the key psychological 130 level, at 130.085, having crossed 130 for the first time in 20 years on Thursday when the Bank of Japan vowed to stick to its super-low yield policy.

Meanwhile, the British pound edged higher to $1.2572 as the dollar weakened, but was still set for its biggest monthly drop since 2016.

Graphic: FX performance –

(Reporting by Elizabeth Howcroft; Editing by Mark Potter, William Maclean)