EUR/USD could be heading above 1.10

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Though the EUR/USD is currently constrained, I believe we could see the euro and other major currencies strengthen against the dollar once equity markets stabilise, which they are trying to today. The greenback has lost its yield appeal due to weak economic indicators hinting at a potential recession in the US. Up until a couple of days ago, currencies with lower interest rates like the yen, franc, and yuan had benefited from the weakening dollar. However, this trend could soon shift towards higher-yielding currencies.

From here, a break above 1.10 handle looks likely given the underlying bullish trend and macro factors mentioned above.

By Fawad Razaqzada, market analyst for FOREX.com