• EUR/USD is back in the red as the US dollar extends the overnight recovery.
• US Treasury yields hold near multi-week top amid hawkish Fed commentary.
• US Preliminary UoM Consumer Sentiment data eyed for fresh Fed rate hike pricing.

EUR/USD is trading close to the 1.0300 mark, struggling to find demand amid an extended recovery in the US dollar across the board.

The market mood remains mixed so far this Friday, as investors reassess the Fed rate hike expectations amid easing US consumer and factory-gate inflation while officials at the world’s most powerful central bank continue to back big rate increases to tame stubbornly high inflation.

Fed expectations and US data in focus 

San Francisco Fed Mary Daly said early Friday, a 50 bps rate hike in September "makes sense" given the recent economic data including on inflation but added that she is open to a bigger rate hike if data warrants. Money markets are now pricing in a 65% chance of a 50 bps hike in September and a 35% chance of a 75 bps lift-off.

Investors are quick to buy into the dips in the US dollar amid hopes that the Fed will continue on its rate hike journey, limiting the upside attempts in the pair. The US Treasury yields also hold onto the recent upswing, with the benchmark 10-year rates hovering near three-week highs of 2.902%.

Meanwhile, markets fully price in a 50 bps ECB rate hike in September but increasing odds of a recession in the euro area, in the wake of the deepening gas crisis, keep hurting EUR bulls.

Attention now turns towards the Eurozone Industrial Production and Current Account data for fresh trading impetus. The main event risk, however, remains the US UoM Preliminary Consumer Sentiment Index due later in the NA for fresh re-pricing of the Fed rate hike odds and its eventual impact on the dollar valuations.

EUR/USD technical levels to consider