By Kevin Buckland and Alun John

TOKYO/LONDON (Reuters)

The U.S. dollar edged off multi-year lows against major peers on Wednesday, though it remained under pressure as traders considered the potential impact of President Donald Trump’s spending bill and looming tariff deadlines.

Market participants are in a holding pattern until they get clarity on these matters, as they await U.S. jobs data for June.

The euro was down 0.33% at $1.1770 on Wednesday but close to its highest since September 2021 hit on Tuesday. The pound was down 0.15% at $1.3722 after hitting a three-and-a-half-year top the previous day.

With the dollar up 0.4% on the Japanese yen at 143.97, the dollar index, which measures the currency against six major counterparts, was slightly higher at 96.744, but near its overnight over three-year low.

A plethora of factors has weighed on the U.S. currency this year, marking its worst first half since the era of free-floating currencies began in the early 1970s. Factors include policy uncertainty making asset managers jittery about U.S. holdings, the unwinding of stretched long dollar positions, and increased bets on the Federal Reserve easing this year.

Traders were watching the European Central Bank’s annual conference in Sintra, Portugal, where Fed Chair Jerome Powell reiterated a patient approach to further rate cuts. He did not rule out a reduction at this month’s meeting, stating that everything depended on incoming data.

This raises the stakes for the monthly non-farm payrolls report on Thursday—moved up a day because of Friday’s July 4 holiday. Signs of labor market resilience in the recent JOLTS figures helped lift the dollar from Tuesday’s lows.

“Weaker economic data is still ultimately needed for U.S. rate cuts, and the JOLTS data raises doubts over the timing of a more pronounced labor market downturn that could prompt the Fed to restart monetary easing,” said Derek Halpenny, head of research, global markets EMEA.

Traders are closely monitoring Trump’s massive tax-and-spending bill, which could add $3.3 trillion to the national debt. Passed by the U.S. Senate, the bill will return to the House for final approval.

Rodrigo Catril, a strategist at National Australia Bank, noted, “The confirmation that this is an increase in issuance and government spending well beyond its means is not good news for the Treasury market and arguably one reason the dollar is declining.”

Additionally, Trump’s ongoing efforts to urge Powell to cut rates have put Fed independence under scrutiny. On Monday, Trump sent Powell a list of global central bank key rates with handwritten comments, suggesting U.S. rates should be between Japan’s 0.5% and Denmark’s 1.75%, stating that Powell was “as usual, too late.”