US JOLTS Preview: Job openings expected to inch lower in April

• The US JOLTS data will be watched closely by investors ahead of the May jobs report.
• Job openings are forecast to edge lower to 8.34 million on the last business day of April.
• Markets don’t expect the Fed to lower the policy rate at least until September.

The Job Openings and Labor Turnover Survey (JOLTS) will be released on Tuesday by the US Bureau of Labor Statistics (BLS). The publication will provide data about the change in the number of job openings in April, alongside the number of layoffs and quits.

JOLTS data is scrutinized by market participants and Federal Reserve (Fed) policymakers because it can provide valuable insights regarding the supply-demand dynamics in the labor market, a key factor impacting salaries and inflation. Job openings have been trending down over the last year and a half, pointing to cooling conditions in the labor market. In March, the number of job openings stood at 8.48 million, marking the lowest reading since February 2021.

What to expect in the next JOLTS report?

"Over the month, the number of hires changed little at 5.5 million while the number of total separations decreased to 5.2 million," the BLS noted in its March JOLTS report and added: "Within separations, quits (3.3 million) and layoffs and discharges (1.5 million) changed little."

Following the 9.3 million openings announced in September, job openings remained below 9 million for six consecutive months. Investors expect job openings to edge lower to 8.34 million in April from 8.48 million in March. Meanwhile, Nonfarm Payrolls rose by 175,000 in April following the impressive 315,0000 increase recorded in March. 

After closing the first four months of the year in positive territory, the US Dollar (USD) Index, which measures the USD’s valuation against a basket of six major currencies, lost more than 1.5% in May. Investors remain hopeful that the Federal Reserve (Fed) could opt for a 25 basis points reduction in the policy rate in September. According to the CME FedWatch Tool, the probability of a policy pivot stands at nearly 55%.

FXStreet Analyst Eren Sengezer shares his view on the JOLTS Job Openings data and the potential market reaction:

“In case the JOLTS Job Openings data for April comes in at or below 8 million, it could reaffirm loosening conditions in labor market and weigh on the USD with the immediate reaction. On the other hand, a reading above 9 million could cause investors to refrain from pricing in a rate cut in September, at least until May jobs report, and allow the USD to outperform its peers.”

When will the JOLTS report be released and how could it affect EUR/USD?

Job openings numbers will be published on Tuesday, June 4, at 14:00 GMT. Eren points out key technical levels to watch for EUR/USD ahead of JOLTS data:

“The Relative Strength Index (RSI) indicator on the daily chart holds comfortably above 50, highlighting a lack of bearish pressure. Following the uptrend that ended on May 16, the pair stabilized above the 1.0780-1.0800 region, where the 50-day, 100-day and 200-day Simple Moving Averages (SMA) are located. If EUR/USD drops below that area and starts using it as resistance, technical sellers could take action. In this scenario, further losses toward 1.0700 (psychological level, static level) and 1.0600 (2024-low set on April 16) could be seen.”

“In case EUR/USD continues to use 1.0780-1.0800 area as support, buyers could remain interested and open the door for a leg higher toward 1.0900 (static level, psychological level), 1.0950 (static level) and 1.1000 (psychological level, static level).”