JOLTS job openings expected to dip slightly in February as markets eye March employment data

• The US JOLTS data will be watched closely ahead of the release of the March employment report on Friday.
• Job openings are forecast to decline toward 7.63 million in February.
• The state of the labor market is a key factor for Fed officials when setting policy.

The Job Openings and Labor Turnover Survey (JOLTS) will be released on Tuesday by the United States (US) Bureau of Labor Statistics (BLS). The publication will provide data about the change in the number of job openings in February, 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 into the supply-demand dynamics in the labor market, a key factor impacting salaries and inflation. Job openings have been declining steadily since coming in above 12 million in March 2022, indicating a steady cooldown in labor market conditions. In September 2024, the number of jobs declined to 7.44 million, marking the lowest reading since January 2021, before rising to 7.8 million and 8.09 million in October and November, respectively. At the end of 2024, the data came in at 7.5 million before rebounding to 7.74 million in January. 

What to expect in the next JOLTS report?

Markets expect job openings to decline to 7.63 million on the last business day of February. Following the March policy meeting, the Federal Reserve (Fed) noted that the Unemployment rate has stabilized at a low level and labor market conditions remain solid. The revised Summary of Economic Projections (SEP) showed that Fed policymakers project a 4.4% unemployment rate at the end of 2025, compared to 4.3% in December's SEP. In the post-meeting press conference, Fed Chairman Jerome Powell repeated that the labor market seemed to be broadly in balance.

It is important to note that while the JOLTS data refers to the end of February, the official Employment report, which will be released on Friday, measures data for March. Additionally, market participants could refrain from taking large positions based on this data before US President Donald Trump announces the details of the new tariff regime on Wednesday. 

In February, Nonfarm Payrolls (NFP) rose by 151,000, falling short of the market expectation for an increase of 160,000. The CME FedWatch Tool currently shows that markets are pricing in a less-than-20% probability of a 25 basis points (bps) rate cut in May. Although the job openings data is unlikely to influence the Fed rate outlook, a significant negative surprise, with a reading at or below 7 million, could weigh on the US Dollar (USD) with the immediate reaction. On the other hand, the market positioning suggests that the USD doesn't have a lot of room on the upside, even if the data comes in better than forecast. 

"Hires held at 5.4 million, and total separations changed little at 5.3 million," the BLS said in its January JOLTS report. "Within separations, quits (3.3 million) and layoffs and discharges (1.6 million) changed little."

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

Job opening numbers will be published on Tuesday at 14:00 GMT. Eren Sengezer, European Session Lead Analyst at FXStreet, shares his technical outlook for EUR/USD:

"EUR/USD clings to a bullish stance but lacks momentum, with the Relative Strength Index (RSI) indicator on the daily chart holding slightly above 50. On the downside, the 200-day Simple Moving Average (SMA) aligns as a key support level at 1.0730 before 1.0585-1.0570 (50-day SMA, Fibonacci 38.2% retracement of the October-January downtrend)."

"Looking north, the first resistance level could be spotted at 1.0900 (static level) ahead of 1.1000 (Fibonacci 78.6% retracement) and 1.1100 (static level)."