By James Ramage

The dollar fell against the yen and euro on Friday after a weaker-than-expected U.S. jobs report for July pushed back investors' timing for the first increase in interest rates since the financial crisis.

The dollar eased 0.2% against the yen to Y102.56. The euro climbed 0.3% to $1.3429 but remained near an eight-month low against the dollar, as a selloff has driven it down around 4% since early May.

The jobs report, a primary gauge the Federal Reserve uses to evaluate the labor market, showed that U.S. employers added jobs at a moderate pace, while the unemployment rate ticked higher to 6.2% in July from June. The U.S. economy added 209,000 jobs in July, below forecasts of 230,000, while June's robust job gains were revised upward.

Though the report showed a sixth straight month of job gains above 200,000, wage growth, an important Fed indicator, continued to stagnate. Coupled with the rise in the unemployment rate, the report provided the central bank little incentive to change its outlook, or push forward its schedule to raise rates.

The jobs report drove investors into U.S. Treasurys, particularly those with shorter maturities, causing yields on the two-year note to decline, and prices, which move inversely to yields, to rise. Yields on notes with shorter maturities are directly affected by changes in Fed interest-rate policy.

The falling two-year yield dragged the dollar lower against rivals. Lower U.S. yields make the dollar less alluring to investors, as they decrease returns on assets denominated in the currency.

"The dollar corrected a little bit after rising nicely over the last week or two," said Carl Forcheski, director in corporate FX sales at Societe Generale. "Today's news probably took away some fears in the market that the liftoff in rates was inching a little closer."

The greenback has rallied over the week on stronger economic data, luring investors to pile into bets that the dollar would continue to rise and raising expectations for a robust July jobs number.

Although the report fell short of expectations, it is unlikely to prompt any longer-term weakness in the dollar, said Robert Lynch, currency strategist at HSBC. U.S. data, including those in the July jobs report, still point to an improving economy overall, which should keep the dollar supported, Mr. Lynch said.

The dollar declined against emerging-market currencies, falling 0.5% against the Turkish lira, 0.3% versus the South African rand and 0.2% against the Mexican peso. The greenback also tumbled 1.8% against the Indonesia rupiah.

Emerging-market currencies, which have been hit hard by the recent dollar rally and the drama surrounding Argentina's recent default, reversed some of their losses Friday.

"The jobs report put a bid back into the [emerging-market] trade, as investors have scaled back somewhat their expectations for a rate hike by the Fed," said Brad Bechtel, managing director at Faros Trading.

Investors have been seeking emerging markets for the returns they derive from the difference between a currency with a higher interest rate, such as the Brazilian real, and one with a low interest rate, such as the dollar. Emerging-market currencies would suffer if the Fed raised interest rates and eroded the yield advantage they currently enjoy.

Improving data have buttressed views in the market that the U.S. economy is approaching the Federal Reserve's mandates. In a statement this week, the Fed acknowledged the improving numbers, suggesting it may be moving closer to its first rate increase since the financial crisis.

Write to James Ramage at james.ramage@wsj.com