The US dollar fell against its major counterparts after disappointing US economic data prompted speculation that the Federal Reserve could take additional monetary measures to boost the sluggish economy. The USD dropped to an 8-month low versus the Japanese yen over concerns about the economic recovery in the US, as well as to a 3-month low versus the euro.

US factory orders fell by more than expected in June from May, while pending home sales dropped an unexpected 2.6% in June, after declining 30% in May. Furthermore, a report was published by the Wall Street Journal suggesting that the Federal Reserve may prevent monetary tightening and start a bond purchasing program once again. The continuous flow of negative US economic data exacerbates concerns that the Fed will have to take monetary action soon.

Investors are keenly awaiting the Non-Farm Payrolls (NFP) data due this Friday to better gauge the pace of US economic recovery. Today traders should follow the release of the ADP Non-Farm Employment Change Estimate due at 12:15 GMT as a prelude to Friday's release, as well as the ISM Non-Manufacturing PMI at 14:00 GMT. Better than expected results may provide the greenback with a much needed boost.