Published research this week is overwhelmingly bearish on the euro against the dollar, with essentially no dissent across short, medium, or longer horizons.
The dominant catalyst cited by analysts is French fiscal risk and its spillover into eurozone sovereign debt. Researchers point to a sharply widened two-year swap rate gap against the euro, compounded by political overhang — France's counter-budget fight, Le Pen's next move, and the prospect of Spanish snap elections. One camp argues that even if European bond markets steady, rate differentials and unfavorable energy dynamics still drag on the euro through the FX channel.
Specific targets being published include 1.09 before any revisit of 1.15, with squeezes framed as selling opportunities, and a deeper 1.10–1.11 zone if bond stress intensifies. The consensus view holds that a strong-dollar regime remains intact until proven otherwise, with the euro acting as the main pressure valve for European stress. The most patient forecast sees no meaningful recovery until the second half of 2027, drifting back toward 1.17 only by late that year.
A contrarian nuance: some recent notes suggest the move looks stretched short-term if French debt stress calms — a pause, not a reversal.