Analysts at HSBC Holdings PLC stated in a report that, according to the bank's model calculations, the current EUR/USD exchange rate is undervalued. They noted, "The euro's rebound has been weaker than the path predicted by the model."

The analysts explained that the model indicates the U.S. Dollar Index (DXY), which measures the dollar against a basket of trade-weighted currencies, shows some key component currencies are currently undervalued, with the euro being particularly notable.

Meanwhile, the dollar "may be slightly overvalued relative to its historical drivers."

The analysts also pointed out that while the euro's exchange rate is typically driven by dollar movements and interest rate differentials, an unusual trend has emerged recently—equity indices have become a significant driver of the euro's exchange rate.