"Constructive on the Euro" in 2026: ABN AMRO
- Written by: Gary Howes
Image © European Union - European Parliament, Reproduced Under CC Licensing.
The euro is shaping up to be one of the more interesting currencies in 2026.
Unlike the dollar, which remains overvalued and vulnerable to further weakness, ABN AMRO's economists say they are "constructive on the outlook for the euro." 
⚙️ Here's why.
At the heart of the call is the interest rate story.
ABN AMRO, one of Europe's most important banks, expects the European Central Bank to keep interest rates stable next year, while the Federal Reserve continues cutting. That means the interest-rate advantage the United States has enjoyed for most of the last decade starts to shrink.
The bank says the "official rate spread Fed-ECB and real rate spread are set to narrow," adding that this shift "will likely be supportive for the euro."
But rates aren’t the only factor: Growth prospects inside the eurozone are also improving.
💬 According to ABN AMRO's 2026 FX forecast briefing, "higher defence spending and German infrastructure spending are likely to drive quarterly growth higher".
That combination of firmer domestic demand and a less-dovish ECB underpins the bank’s view that the euro should rise against the dollar.
The bank’s own valuation work backs the same idea.
Its BEER model - which estimates a 'fundamental' exchange rate using macro variables - points to a EUR/USD value of 1.23, the "highest since 2017."
And on purchasing-power comparisons, the dollar still screens as materially expensive relative to Europe.
📈 The report notes that PPP analysis "suggests a EURUSD valuation of 1.42," also consistent with long-term appreciation potential.
Still, this isn’t a one-way bet.
ABN AMRO warns that "the fiscal situation in France could dampen the upside in the euro, especially versus countries that have more sound fiscal finances such as Switzerland, Norway and Sweden."
🔎 But when investors compare fiscal risks across developed markets, Europe still screens more stable than the United States.
The report argues that if markets become more sensitive to debt sustainability, "the US is in the most precarious position."
Put all these pieces together - stabilising ECB policy, shrinking US-EU rate spreads, improved eurozone growth and a US fiscal profile that looks increasingly stretched - and the bank concludes that the euro should grind higher through 2026.
Their forecast table reflects exactly that. ABN AMRO projects EUR/USD rising from 1.15 in late 2025 to 1.25 by Q4 2026.
