Morgan Stanley Research adopts a neutral to slightly bullish bias on EUR in the near-term.

"We see modest near-term idiosyncratic upside risks to the EUR, as our economists see the ECB tone as likely to keep  a September hike on the table. They note risks that core inflation moves up in 3Q26, as the ECB expects. A relatively  hawkish tone from President Lagarde this week would likely solidify hiking expectations, potentially leading investors  to seek alternative funders for long EM carry trades," MS notes.

"One potential near-term catalyst is the July 24th expiry of across the-board US tariffs. The absence of any announcement of 232 or 301 replacements (as expected) may boost EUR, as  data from Yale Budget Lab suggest that the effective tariff rate on Germany may fall over 3 percentage points in the  absence of the section 122 surcharge, more than a number of other developed economies," MS adds.