Things have not been going well for the dollar lately. In the second quarter, US GDP fell at a record, with which the Fed showed a pessimistic attitude in the July meeting. In addition, the US government couldn't find a consensus regarding new programs that would help the national economy.

Meanwhile, the coronavirus continues to spread in the United States. The number of COVID-19 cases in the country has already reached almost 5 million, and the death rate has exceeded 161 thousand. The uncertainty associated with the presidential elections in November also adds fuel to the fire.

Nevertheless, the US dollar bounced off a new two-year low at a price level of 92.52 ahead of the July US labor market report, recovering some of its losses since the start of the week.

"The dollar moved away from the brink, but for the bulls, this is only of tactical interest unless risk sentiment falls," strategists at Saxo Bank said.

According to experts, the upcoming US employment report poses a serious risk for the dollar, which explains its recent decline against most of its major competitors.

The US economy is projected to create 1.48 million jobs in July, quite a bit from 4.8 million in June.

Authorities in some of the most populous states in the United States have tightened social distancing policies as coronavirus cases hit record levels.

Forecasts for the July US labor market report were very disappointing. Layoffs are projected to grow about 576.1% against the 305.5% noted a month earlier, mainly due to the weak report published by the ADP, which showed an increase in jobs by only 167 thousand against the expected 1.5 million. Employment components of the ISM and PMI indices also remained below 50 points, separating growth from contraction.

If these assumptions turn out correct, with which the number of jobs created in July does not meet expectations, the US dollar is certain to face a new round of decline.

However, a rise in the dollar could still occur, if the number of new jobs exceeds forecasts, the average salary increases, and Congress nevertheless agrees on the next stimulus package.

Some experts, though, are skeptical that the dollar will rise, especially against the euro, amid rapidly dying hopes for a V-shaped economic recovery.

UBS specialists even revised their forecast for the EUR / USD pair upward, from 1.17 to 1.20.

"In the long term, the rise in US government debt is likely to affect the US dollar, so the risk of a depreciation should not be neglected," UBS said.

"Amid uncertainty over the upcoming presidential elections in the United States, and expectations that the Fed will implement another easing in the fall, the US dollar is likely to weaken by the end of the year," analysts at ANZ also commented.

"We expect the EUR / USD pair to enter a price range of 1.20-1.25. However, if the US Congress fails to agree on further stimulating the national economy, demand for the dollar will decrease even further in the short term. In this case, the weakening of it will be more significant, and the EUR / USD pair may reach a range of 1.25-1.30," they added.