The dollar fell to its lowest level versus major competitors in almost a month on Friday, ahead of a key US employment report that could prompt the Federal Reserve to begin reducing stimulus sooner than expected.
The dollar index, which compares the dollar to six other currencies, fell 0.04 percent to 92.193 after briefly touching 92.189 for the first time since August 5.
After touching its highest level since August 4 at $1.1880, the euro gained 0.02 percent to $1.1878.
The Federal Reserve of the United States has established a labour market recovery a requirement for reducing pandemic-era asset purchases.
The dollar had been gaining for most of last month on expectations of a taper, despite a surge in Covid-19 cases in the United States, which paradoxically boosted the currency due to its function as a safe haven.
However, after hitting a 9 1/2-month high of 93.734 on Aug. 20, the dollar index fell as Fed officials suggested that the virus' spread could delay policy tightening.
Chair Jerome Powell said last week at the Fed's Jackson Hole conference that a taper was still feasible this year, but that there was no need to boost interest rates later, which would send the currency even down.
According to a Reuters poll of experts, monthly non-farm payrolls are predicted to climb by 750,000, with the unemployment rate decreasing to 5.2 percent from 5.4 percent. However, estimates range from 375,000 to more than a million people.
The economy has sent mixed signals ahead of the report. Overnight, data revealed that layoffs had decreased to their lowest level in almost 24 years. The ADP National Employment Report, released on Wednesday, was, nevertheless, far worse than economists had predicted.
The Commonwealth Bank of Australia estimates that the US added 800,000 jobs last month, which it believes would be enough to prompt the Fed to begin tapering, albeit the current epidemic has raised the stakes for an announcement at this month's meeting.
In a client note, CBA strategists said, “The danger is that the virus-related uncertainty gets in the way of an imminent taper announcement,” reversing any dollar gains from a positive payrolls data.
The Australian currency was barely changed at $0.74005, down from $0.74095, its highest level since August 5.
After reaching to its highest level since June 16 at $0.7120 in the previous session, the New Zealand dollar was nearly unchanged at $0.71145.
The dollar was little changed at 109.915 yen, staying close to the middle of its trading range for the first time since early July.