The euro surged to a one-year high today, adding to its biggest daily gain in more than a year yesterday following a change in tone by European Central Bank President Mario Draghi.
The hints in Mr Draghi's speech to a major central bank conference in Portugal convinced investors that ECB policymakers are ready to start to withdraw the emergency stimulus for the economy that has dominated policy-making for almost a decade.
That provoked the banking world's single biggest cheerleaders for a stronger dollar, Deutsche Bank, to abandon calls for a stronger US currency and instead call the end to a dollar rally dating back to 2014.
"Our main message is that the EUR is likely to be the key vehicle via which financial conditions in the Euro-area will be tightened," Deutsche analyst George Saravelos said in a note to clients.
"We now see the risks as shifting towards an attempted break-out of the euro’s multi-year 1.05-1.15 range to the topside."
Mr Saravelos, who at the height of the dollar's rally called for the euro to fall to $0.85 by the end of this year, raised his end of year forecast from $1.03 to $1.16.
In Asian and early European trade, the euro rose another 0.7%, adding to a 1.4% daily gain yesterday.
Shortly before 6.30pm the euro was worth $1.1375, while against sterling it was trading at £0.8798.