LONDON, May 31 (Reuters) - The dollar firmed on Friday as traders await key inflation data after a downward revision to first-quarter U.S. economic growth suggested the Federal Reserve could still be on track to cut interest rates this year.

Meanwhile, the euro edged lower ahead of euro zone inflation data due at 0900 GMT, which could firm expectations for an European Central Bank rate cut next week.

Investors are awaiting the release of the Fed's preferred measure of inflation, the Personal Consumption Expenditures (PCE) price index, due at 1230 GMT, for further indications on how the central bank might proceed.

"The data-dependent Fed means that the April core PCE deflator will be an important market mover should it deviate away from the consensus 0.3% MoM (month-on-month) reading," said Chris Turner, head of markets at ING.

Official data showed on Thursday that the U.S. economy grew at an annualised rate of 1.3% from January through March, down from the previous estimate of 1.6% after downward revisions to consumer spending.

The revision keeps the Fed on track to potentially cut rates at least once this year. The central bank will look closely at inflation data before it feels comfortable enough to begin cutting, analysts said.

Jim Reid, strategist at Deutsche Bank, said U.S. PCE data "still gets a lot of attention because it’s what the Fed officially targets".

Markets currently price in a 45% chance of a first rate cut in September, according to the CME Group's FedWatch Tool.

The dollar index rose 0.09% to 104.88 after climbing to a two-week high on Thursday.

Earlier this month, softer U.S. consumer price inflation data rekindled rate cut expectations for this year, weakening the dollar across the board and setting it on track for its first monthly losses in 2024.

But expectations for rate cuts this year have wobbled amid signs of sticky inflation, most recently with a surprise uptick in consumer sentiment in data on Tuesday.

EURO ZONE INFLATION

The euro edged down 0.1% to $1.0823, staying close to a two-week low of $1.0788 hit on Thursday, ahead of inflation data for the euro zone, which is expected to show a slight uptick in May.

French inflation data released earlier on Friday, and German and Spanish figures released earlier this week, all came in slightly higher than expected.

The figures could firm markets' view that the ECB is ready to start cutting rates as early as next week.

According to all 82 economists polled by Reuters, an ECB rate cut on June 6 appears certain, with a majority predicting further reductions in September and December.

Elsewhere, the yen slipped 0.2% against the dollar to 157.13, but remained off this week's four-week low as Japan's finance minister repeated warnings about excessive currency moves.

Data on Friday showed core consumer inflation in Tokyo accelerated in May but price growth excluding the effect of fuel eased, heightening uncertainty over the timing of the Bank of Japan's next rate hike.

The yen has steadily slipped closer to the 34-year low of 160.245 from a month ago, a level which market players suspect triggered two rounds of dollar-selling intervention by Tokyo.

The offshore Chinese yuan was 0.1% lower versus the dollar at 7.2615 after an official factory survey showed China's manufacturing activity unexpectedly fell in May.

(Reporting by Joice Alves and Brigid Riley; Editing by Mark Potter)