The U.S. dollar index fell slightly on Friday after data showed U.S. job growth slowed marginally in June while the unemployment rate rose, underscoring the view the Federal Reserve could begin cutting interest rates in September.

The dollar index initially extended declines and the dollar weakened against the yen before paring losses.

The index, which measures the greenback against a basket of currencies, was last down 0.21% at 104.91, with the euro up 0.19% at $1.0831.

Against the Japanese yen, the dollar was down 0.32% at 160.74. It was near 160.45 just after the U.S. payrolls data.

Nonfarm U.S. payrolls increased by 206,000 jobs last month, the Labor Department report showed. Data for May was revised sharply down to show 218,000 jobs added instead of the previously reported 272,000. The unemployment rate rose to 4.1%, slightly higher than the estimated 4.0%

“We see rates coming down across the curve on confirmation of a moderation in U.S. labor markets. The unexpected rise in the unemployment rate, the deceleration in wage gains and revisions in prior months’ headline gains all point to a slowing in labor market conditions,” said Karl Schamotta, chief market strategist at Corpay in Toronto.

“This is… raising the likelihood that we do see (Fed) Chair Powell put a September rate cut on the table either at the July policy meeting or at the Jackson Hole conference in August.”

Investors have been watching the labor market and inflation data closely as they try to gauge when the Fed could begin cutting interest rates from nearly two-decade highs.

Futures markets are now pricing in a roughly 72% chance for a 25 basis point rate cut at the Fed’s meeting in September, up from a 57.9% chance seen a week ago, according to CME’s FedWatch Tool.

The pound firmed as the Labour party secured a landslide victory in the UK general election.

Sterling was last up 0.42% at $1.281.

The euro was bolstered by signs France could be heading for a hung parliament in elections on Sunday rather than a ruling majority for the far-right National Rally.