Published research is leaning heavily bearish on the euro against the dollar, with only a narrow contrarian camp seeing a rebound.
The bear case, laid out across most recently-published analyst notes, rests on three pillars. First, French political and fiscal stress — widening bond spreads, budget uncertainty, and the risk of political paralysis in Paris — is flagged repeatedly as a direct drag on the euro. Second, rising global bond yields and a still-hawkish Fed are widening the US–eurozone rate gap, keeping the dollar firm. Third, one strand of research argues EUR/USD may be structurally overpriced by as much as six cents once peripheral eurozone spreads are properly accounted for, and a more aggressive contrarian view suggests the euro could even break below parity.
The dissenting camp argues current weakness is overdone. In their framing, once Fed and ECB rate expectations converge and the French budget standoff is resolved, EUR/USD stabilises and recovers toward 1.15 by end-2026. The real split is about whether France's fiscal stress fades or festers.