U.S. job growth probably picked up only slightly in May, suggesting the economy is still in a rut and not ready for the Federal Reserve to dial back its monetary support.
Employment outside the farming sector likely increased by a lackluster 170,000 jobs, according to a Reuters survey of economists. That would be just above the 165,000 created in April. A disappointing number could trim long dollar bets while better-than-expected data would give the U.S. currency a boost.
The direction of the dollar versus the yen will likely be swayed by how U.S. Treasury securities react to the jobs data.
The euro was last up 0.1 percent at $1.3084, off a peak of $1.3107 reached on Monday, which was its highest since May 9. Euro zone producer prices fell further in April, marking the biggest month-on-month decrease in nearly four years and keeping alive chances of more interest rate cuts by the European Central Bank.
The week's big euro focus will be the ECB's monthly meeting on Thursday, at which officials are expected to hold interest rates steady. But a post-meeting press conference by ECB President Mario Draghi will come under scrutiny for clues on the prospects of a rate cut.
"Generally speaking, the euro looks set to continue to outperform this week, especially into the European Central Bank policy meeting on Thursday," said Christopher Vecchio, currency analyst at DailyFX in New York.
"There has been growing chatter that the ECB could implement negative rates in order to help stoke the region's depressed and increasingly frozen credit flow, but that seems unlikely to me right now," he said.
The Australian dollar was last down 1.3 percent at US$0.9642 after the Reserve Bank of Australia held rates at 2.75 percent and governor Glenn Stevens said easing was still on the table.
(Read More: Australia Central Bank Keeps Rates Unchanged, as Expected)