Will US JOLTS job openings show the expected strength in labour demand and bolster Fed rate hike bets?

• US job openings are expected to stay above the 2025 average, despite a projected fall to 7.28 million in May’s JOLTS report.
• Markets will look to the Job Openings figures for validation of expectations for Federal Reserve rate hikes.
• Pressure persists on EUR/USD, which is trading within relatively close reach of its 13-month lows.

Markets are closely watching the May Job Openings and Labor Turnover Survey (JOLTS), due from the US Bureau of Labor Statistics on Tuesday at 14:00 GMT. Drawing on employers’ estimates of job openings, hiring and separations across the US, the survey usually precedes a series of employment indicators through the week. That sequence concludes with the closely tracked Nonfarm Payrolls report.

With markets reassessing the likelihood of US Federal Reserve (Fed) interest rate hikes, Tuesday’s May JOLTS release comes at a critical juncture and is likely to attract close scrutiny. Inflation continues to climb at levels well above the central bank’s target.

Despite the recent retreat in Crude prices, inflationary pressures have not eased, while considerable uncertainty persists over the Middle East conflict. Investors’ hopes of at least one rate hike this year have strengthened following the Fed’s renewed commitment to tackling inflation. Against this backdrop, the labour market releases this week could be crucial in judging when the next monetary policy move might come, while also providing a fresh impetus to US Dollar (USD) volatility.

Will May’s JOLTS figures point to a stabilising labour market?

Market consensus puts May job openings at 7.28 million, implying a modest fall from April’s 7.61 million, the highest reading since July 2024. Even so, the projected figure would remain robust and comfortably above the 2025 average of 7.08 million openings. Confirmation of these estimates would likely support the view that the US labour market is stabilising and reinforce the narrative of US economic exceptionalism.

In April, JOLTS exceeded forecasts as openings rose 4.6% month on month, adding 731,000 vacancies to March’s 6.88 million. Quits, layoffs and discharges, by contrast, showed little change.

The US Nonfarm Payrolls report also recorded 172K additional jobs in May, rounding off a strong three-month performance through May. Confidence in the US economy’s resilience to the Middle East war strengthened on these numbers. They also enabled Fed policymakers to set aside labour market concerns and concentrate entirely on above-target inflation when shaping near-term policy. In response to this changed backdrop, investors have increased their bets on some monetary tightening over the coming months.

Futures markets now assign a 30% probability to a rate hike at next month’s Federal Open Market Committee (FOMC) meeting and a more than 60% probability to monetary tightening in September, according to the CME Group’s Fedwatch Tool. The corresponding probabilities stood at  6% and 20% respectively a month earlier. Investors will scrutinise this week’s employment data to test those expectations.

 When is JOLTS due, and what could it mean for EUR/USD?

With EUR/USD still relatively close to its 13-month lows, the pair is heading for a 2.17% decline in June and a fall of nearly 3% across the past two months. The Job Openings figures are scheduled for Tuesday at 15:00 GMT.

Continued US economic outperformance relative to the Eurozone and weaker risk appetite owing to Iran’s war leave EUR/USD tilted lower, according to FXStreet analyst Guillermo Alcalá: “The Euro has remained vulnerable over the last two months amid geopolitical woes and a sluggish economic growth in the Eurozone. Unless the scenario changes significantly, Euro rallies are likely to offer good entry opportunities for sellers. The 13-month low at 1.1325 remains the key support level. Further down, bears might be tempted to revisit the late May 2025 low at 1.1210.”

For any upside move, Alcala identifies the resistance zones at 1.1500 and 1.1620-1.1640 as the principal obstacles facing buyers: “The pair is struggling to consolidate above 1.1400 at the time of writing in a rebound from the mentioned 13-month lows, which, so far, seems corrective. Bulls should break the 1.1500 area (June 8,11 lows) and preferably also the area between 1.1620 and 1.1640, where late May and early June highs meet the descending trendline from the year-to-date (YTD) highs, to break the negative structure.”