USD Weakens as Employment Concerns Mount Before NFP Release

The US dollar retreated against major currencies as deteriorating labor market sentiment weighed on the greenback ahead of Friday's crucial Non-Farm Payrolls report. EUR/USD advanced 0.4% to 1.0820, while GBP/USD climbed 0.5% to 1.2720, with both pairs breaking above key resistance levels. Recent employment indicators have painted a mixed picture, with job openings declining to 8.1 million and continuing jobless claims rising to 1.86 million, their highest level in six months. The dollar index dropped 0.6% to 101.20, marking its lowest level in two weeks. Market participants are pricing in a 65% probability of a Federal Reserve rate cut by December, up from 45% last week. Technical analysis shows EUR/USD targeting 1.0850 resistance, while GBP/USD eyes the 1.2750 level. EUR/GBP remained stable at 0.8510. Traders should monitor Thursday's ADP employment data for additional clues about labor market health before Friday's pivotal NFP release.