NEW YORK (CNN/Money) - The dollar rose to a high for the week Friday as investors bought into the market following a month-long slide and anticipated a greenback-boosting interest rate hike next week.

Bonds fell ahead of the Federal Reserve's expected rate increase.

The euro bought $1.3322 early Friday, down from $1.3374 late Thursday. Earlier in the day, the dollar hit a high against the euro for the week at $1.3265.

The greenback also gained on the yen, buying ¥104.72 early Friday, up from ¥104.57 Thursday.

Investors expect the Federal Reserve will raise the overnight lending rate a quarter of a point at its policy meeting next Tuesday, a boon for the dollar given that rising rates make dollar-denominated securities more attractive to foreign investors.

With a quarter point increase priced into the market, attention is focused on whether the statement accompanying the rate decision will drop the word "measured" and indicate larger increases in the months ahead. With oil rising at such a rapid clip, there is speculation the Fed may remove the wording to further tighten the screws on inflation.

If the Fed were to delete the "measured" language from its statement, that would signal it felt "the economy was a bit stronger than had been believed, that inflation might be a bit stronger, and would point to higher rates at a quicker pace," Hugh Walsh, vice president of foreign exchange with Fortis Bank in New York, told Reuters.

"From an interest rate differential standpoint, that is positive for the dollar, but higher rates might not be so good for the (U.S.) stock market so we could see some selling of (dollar-denominated) assets," Walsh added.

The dollar also got a lift from buyers bargain hunting after a month-long selloff, with the dollar hitting a two-month low against the euro and a six-week low against the yen last week.

The greenback steadied this week, in part thanks to reports showing foreign buying of U.S. assets has been more than enough to cover the United States' huge trade deficit.

In the government bond market, yields rose ahead of the Fed meeting as traders debated whether the central bank would pick up the pace of monetary tightening. The Fed has raised rates by a quarter percentage point at each of its last six policy-setting meetings, taking the key federal funds rate to 2.5 percent.

The benchmark 10-year note lost 10/32 of a point to 95-31/32, yielding 4.51 percent, up from 4.47 late Thursday.

Yields on the 10-year-note are near seven-month highs.

The 30-year bond slipped 27/32 of a point to 108-9/32 to yield 4.81 percent, up from 4.76 percent late Thursday. Bond prices and yields move in opposite directions.

The five-year note lost 5/32 of a point to yield 4.17 percent, while the two-year slipped 1 tick, yielding 3.69 percent.

"We feel the risks to the bond market are that the Fed does choose next week's FOMC meeting as the opportune time to drop the 'measured' clause, with the idea being to afford the committee more future flexibility to be more aggressive should they choose to be if inflation unexpectedly ratchets higher," Kenneth Logan, a managing analyst at IFR Markets, told Reuters.

Bond prices also fell as corporate credit quality concerns eased. General Motors Corp.'s profit warning Wednesday had set off a wave of flight-to-safety buying of government bonds as traders worried the auto maker's debt would be downgraded to junk.

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