Bank of America Securities expects EUR/USD to gain further from the second quarter onwards, despite the pair's recent pullback. The currency pair traded at $1.1786, down 0.8% over the past month, as the U.S. dollar has made a modest comeback against the euro.

Analysts at the U.S. bank remain bullish on the pair, projecting larger gains once the U.S. peak tax-refund season concludes and Germany's fiscal stimulus becomes more apparent in economic data. The main risk to this outlook is an earlier, sharper rally if European investors accelerate structural buying through U.S. asset sales or hedge-ratio adjustments.

January's rally showed unusual time-zone dispersion, with most movement occurring during U.S. hours, suggesting U.S.-based investors dominated rather than foreign buyers. The pattern aligns with BofA's broader FX-flow indicators, which show little evidence of investors rushing to unwind U.S. exposures. However, relative equity performance indicates the marginal investment dollar is rotating into non-U.S. markets, with the U.S. share of global equity inflows in 2026-to-date at its lowest since 2020.