The investment bank said that the euro was difficult to rise further against the dollar, falling back to 1.11 a month later.

Jane Foley, head of FX strategy at Rabobank, said the dollar could weaken broadly in the short term, with signs that the European Central Bank's rate hike cycle is peaking, suggesting that the euro may struggle to rise further against the dollar after the summer. She added that she expected the euro to fall back to 1.11 against the dollar in a month's time.

Jane Foley, head of FX strategy at Rabobank, wrote in a forecast review: "Disinflationary signs in the US and heightened skepticism about the Fed's ability to raise rates after its July meeting suggest broad dollar weakness in the near term. That said, there are signs that the ECB's rate hike cycle is peaking.This suggests that the euro may struggle to rise further against the dollar after the summer。

Foley believes that if fears of a U.S. recession persist through the end of the year, the dollar could benefit from broad support.She added that she also expected the euro to fall back to 1.11 against the dollar in a month's time.Last week, when official data showed that US inflation had fallen back to 3 per cent in June, close to the Federal Reserve's 2 per cent target, a broad sell-off in the dollar led to a rally in risky assets such as US equities and commodities, while pushing up the euro, sterling and other currencies against the dollar.

Valentin Marinov, head of FX strategy at Cre ́ dit Agricole, wrote in a market commentary on Monday: "Relative to our short-term fair value of 1.0957, the euro now looks quite expensive against the dollar. We estimate this value based on FX drivers such as spreads and spreads of neighbouring countries over German Bunds."

Roberto Mialich, FX strategist at UniCredit, said: "We think the euro/dollar is likely to consolidate around its current highs before the July 26 FOMC meeting. Investors may choose to wait and see what message Federal Reserve Chairperson Jerome Powell delivers in his press conference before pushing the pair higher."

Parisha Saimbi, FX strategist at BNP Paribas, said: "We expect the European Central Bank to continue to tighten monetary policy (recent unexpected downside data have not changed our 4 per cent final rate forecast) and the Bank of Japan to widen the yield curve control band this month to support the euro and yen."

She added: "We continue to expect the euro to rise to 1.18 against the dollar and the dollar to fall to 123 against the yen by the end of 2024, although we think these targets are likely to be met earlier."

EUR/USD daily chart

At 20:40 on July 17, Beijing time, the euro was trading at 1.1225/26 against the dollar.