* U.S. economic growth slows in Q4 on surging imports
* Yen up on BoJ's Kuroda comments on economy, inflation
(Updates prices, market activity, adds comment)
By Saqib Iqbal Ahmed
NEW YORK, Jan 26 (Reuters) - The dollar remained weak against a basket of currencies on Friday, bruised by comments by senior U.S. officials this week backing a weak dollar, and was on pace for its worst weekly fall since June.
The dollar index , which measures the greenback against a basket of six major currencies, was down 0.33 percent at 89.1 and on track for a weekly fall of 1.6 percent.
President Donald Trump's comments on Thursday that he wanted a "strong dollar," a day after Treasury Secretary Steven Mnuchin said a weaker greenback would help U.S. trade balances in the short term, failed to put a lid on volatility and keep dollar bears in check.
The euro was up 0.15 percent against the greenback at $1.2413, after hitting a more than three-year high of $1.2536 on Thursday.
"$1.25 in euro-dollar is a critical level and it's got a lot of sticker shock associated with it," said Greg Anderson, global head of FX strategy at BMO Capital Markets.
"There were probably a lot of options barriers and lots of stops up there that people would love to take out. You would expect to see an acceleration in volatility," he said.
"We did have those comments, and it added to the drama," Anderson said.
The market was likely to take a breather now but the underlying trend for a gradually weakening dollar remained intact, Anderson said.
UBS Wealth Management upgraded its six-month forecasts for the euro on Friday to $1.28, from $1.22. Data showing U.S. fourth-quarter gross domestic product increased at a 2.6 percent annual rate, held back by a modest pace of inventory accumulation, had little impact on the greenback. Economists polled by Reuters had forecast a 3 percent increase. "The disappointing print surprised market participants who had expected a number exceeding 3 percent in the October-to-December time period - but on a full-year basis, the economy's stellar growth performance remains largely intact." Karl Schamotta, director of global product and market strategy at Cambridge Global Payments, said in a note.
The dollar slipped to 4-1/2-month low against the Japanese yen after Bank of Japan Governor Haruhiko Kuroda said the central bank expects the economy to continue growing at a moderate pace and inflationary expectations are picking up slightly. The yen gave up some gains later in the session. The pound edged higher further against the dollar amid increased optimism around Brexit and the economic backdrop. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC-Global assets in 2018 GRAPHIC-World FX rates in 2018 GRAPHIC-President Trump's comments on the U.S. dollar ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>(Reporting by Saqib Iqbal Ahmed; editing by Susan Thomas and Nick Zieminski)
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