The jobs report, due on Friday, will be the highlight of a U.S. data-heavy week that includes the final reading of fourth-quarter gross domestic product and the February reading of the PCE price index -- an inflation gauge favored by the Fed.
Economists expect the payrolls data to show that the U.S. economy created 220,000 jobs in March, down from 262,000 in February, which was the biggest gain in four months.
Analysts said that in the near term at least, the dollar could climb higher on the covering of short positions, especially if the data confirms that jobs growth is strong.
"Given the current sentiment in the market, there's probably a greater chance of the dollar rallying on a strong number than the risk of any sort of sell-off if there is disappointment," said Junya Tanase, a currency strategist at JPMorgan Chase in Tokyo.
Figures released last week showing core U.S. consumer prices rising at the fastest year-on-year pace since 2002 fueled expectations that the Fed could raise rates faster than the current "measured" pace.