Analyst Francesco Pesole from ING Groep NV noted in a report that the euro appears undervalued against the U.S. dollar after recent declines. The analyst stated that the dollar's rally has surpassed what can be explained by short-term drivers such as interest rate differentials and safe-haven demand following recent stock market declines.

ING estimates that the euro is undervalued by 1.3% against the dollar. Pesole suggested that for the euro to weaken further, it would require a significant accumulation of risk premiums or a further reduction in expectations for U.S. rate cuts. "We expect the currency pair to stabilize in the coming days, with potential upside risks toward $1.160," he added.

According to data from the London Stock Exchange Group, the euro rose 0.2% to $1.1513 on Wednesday after hitting a three-month low of $1.1468.