The dollar last traded at 96.98 yen, down 2.1 percent after having struck a low of 95.96 yen in early afternoon North American trade, the lowest since mid April. The U.S. currency lost 1 percent against the yen on Wednesday.
Dollar-yen has been tracking the Nikkei stock average over its steep decline in the past two weeks as foreign investors pare back the hedges they had put in place for protection from the yen's slide between November and May.
Economists polled by Reuters estimated U.S. employers likely added 170,000 jobs in May, while the jobless rate remained unchanged at 7.5 percent, still a full percentage point above the 6.5 percent Fed policymakers want to see.
The Fed's quantitative easing is tantamount to printing money. Dollar bulls had been hoping the Fed at its next meeting on June 18-19 would announce plans to reduce its program.
While financial markets will almost certainly react to the jobs data, some believe its impact on Fed policy is overstated.
"With respect to the Fed, policymakers generally do not put too much emphasis on one month's jobs reading. There are three more employment reports between now and September and thus plenty of time for job growth to rebound, as we expect it will," Deutsche Bank said in a report. "Consequently, while the financial markets may overreact to disappointing May results, Fed policymakers probably will not. This implies that tapering of QE could still come as early as the September 17-18 FOMC meeting," the firm said.
The dollar's broad-based decline on Wednesday intensified after a closely watched report showed hiring by U.S. firms was sluggish in May. That raised the risk that Friday's nonfarm payrolls could disappoint and lessen the likelihood that the Fed will taper its easing program early.
Nick Bennenbroek, head of currency strategy at Wells Fargo in New York, said a modest downside surprise to the U.S. jobs data would support the case for the Fed maintaining its existing policy approach and would likely weigh on the dollar. But he also said that a particularly negative jobs number could raise concerns about the economic growth outlook, a factor that could potentially weigh on emerging-market currencies.
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The euro hit a high of $1.3304, its highest since late February, and was last trading at $1.3242, up 1.1 percent on the day. The euro zone's common currency also benefited from buy orders above $1.3150, traders said. Against the Japanese yen, the euro fell 0.9 percent to 128.48 yen, according to Reuters data.