USD fell against most major currencies in the European session on Thursday, as risk sentiment improved, underpinned by macro data showing economic recovery worldwide and news of a potential coronavirus vaccine.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, dropped 0.24% to 96.96.

Institute for Supply Management (ISM) reported on Wednesday that manufacturing activity in the U.S. rebounded more than forecast in June, hitting its highest level in more than a year, as the broader economy reopened. China, Germany and France also saw improvements in factory activity last month. The latest portion of encouraging data bolstered hopes of a global economic recovery from the pandemic.

Market participants are now awaiting the U.S. jobs report for June due at 12:30 GMT. Economists forecast that U.S. nonfarm payrolls rose by 3 million last month after a 2.5-million climb in May as the world's biggest economy continues to improve.

The news that Pfizer (PFE) and BioNTech (BNTX) made progress on their COVID-19 vaccine candidate also continued to support sentiment. 

Meanwhile, worries about the current COVID-19 situation blunted more aggressive risk-taking. According to the Johns Hopkins Center for Systems Science and Engineering, the total number of confirmed global cases of the COVID-19 rose to 10,694,288, with the U.S. recording 2,686,480 coronavirus cases, the most in the world.  

The minutes from the Fed's June 9-10 meeting, which were released on Wednesday, highlighted concerns about a spike in coronavirus infections due to early reopening, and that highly accommodative monetary policy would likely be needed to facilitate the recovery.