Deutsche Bank expects the euro to strengthen meaningfully over the next two years, projecting EUR/USD to reach 1.25 by end-2026, up from around 1.1560 currently. In its year-end FX outlook, the bank argues that a combination of improving global growth, a cyclical recovery in Europe led by Germany, and the possibility of a Russia–Ukraine peace deal should help the euro break above 1.20 during 2026.
The analysts also note that the euro’s external position remains solid, providing an additional cushion. A key condition, however, is that undervalued Asian currencies—especially the yen and yuan—stage a recovery, which would push the dollar lower and create room for the euro to advance. Deutsche Bank adds that reserve managers may increasingly view the euro as a safe-haven alternative, offering another source of potential upside.
This article was written by Eamonn Sheridan at investinglive.com.