RBC expects the euro to strengthen against the dollar in 2026

RBC analysts predict an increase in the EUR/USD exchange rate to 1.24 by 2026, highlighting three key factors.

First, there is a reduction in the cost of hedging American assets, which may encourage a reallocation of positions in favor of the euro.

Secondly, the expected rotation of capital from the US markets to European markets, which will create additional demand for the single currency.

Third, the projected acceleration of economic growth in Europe, which will fundamentally support the euro.

At the same time, RBC points to constraining factors: the higher productivity of the US economy, the lack of European bonds of comparable attractiveness, America's technological leadership in AI, and continuing political risks in the EU.