The European market session saw the US dollar retreat slightly from its 3-month high as the market awaited more economic data to guide Federal Reserve (Fed) policy.
The giant currency previously got a boost from Fed Chairman Jerome Powell's statement about the possibility of interest rates going higher.
It also prompted expectations for a rate hike of 50 basis points at their meeting in 2 weeks.
However, on the second day of testimony before Congress, the central bank chief said the Fed still had not made any decision for this month's meeting, and it would depend on the data to be published.
Investors are now focusing on the release of US jobless claims data as an indication of the NFP report.
Earlier, investors were treated to the release of US ADP employment data which showed stronger growth in private sector employment.
This further highlights the strength of the labor market in the country and gives the impression that the NFP reading may be better than expected.
Against a basket of major currencies, the dollar index, which measures the strength of the greenback, traded slightly lower at 105.38.
The euro and pound are seen paring some losses but are still trading around 2-month and 4-month lows against the US dollar.
Meanwhile, the Aussie and New Zealand dollars hovered around a 4-month low after China's annual inflation data showed a lower-than-expected reading in February.
