Most published research is leaning bullish on the euro versus the dollar, with one notable holdout.
The bullish case rests on diverging macro dynamics. Researchers argue improving European growth is starting to pull capital away from the US, and the published consensus flags that the 2-year yield gap is turning in the euro's favor as European yields climb and US yields may soften into upcoming CPI data and Fed Chair Powell's testimony. Cyclical forecasts from one camp of analysts see EUR/USD grinding from the low 1.13s toward 1.17–1.18 through 2026, anchored by eurozone stabilization and a gradual narrowing of the transatlantic rate gap. One longer-dated view extends that appreciation roughly 7% out to early 2028.
A contrarian thread of recent research pushes back, using the euro as a funding currency for carry trades. It cites no German fiscal optimism, ECB tightening into weak European growth, and no real equity rotation into Europe — while conceding a shift in equity flows could flip the picture fast.