Berlin : Europe's debt crisis will depress the euro still further, and for years to come, after it declined to the lowest level since 2006, according to UBS and BNP Paribas.
For the 16 countries using the currency, that isn't all bad.
A drop over three to four years would benefit European exporters in countries such as Germany, where foreign sales help offset reductions in government spending and restraint by consumers concerned about inflation.
US exports, which President Barack Obama said he wanted to double within five years, may become less competitive.
"The euro's depreciation is very good news for the region" because the rest of the world economy is expanding, said Charles Wyplosz, head of the International Center for Monetary and Banking Studies in Geneva.
"This is going to bring a welcome boost that may save the euro zone from outright recession."
While Wyplosz put the euro's long-term "fair value" at between about $1.10 (Dh4.03) and $1.20, currency movements "tend to overshoot," he said.
"My bet is that the euro still has ample room to go down before it goes up."
Wyplosz's view is shared by strategists at UBS, Danske Bank, Royal Bank of Scotland Group and Bank of America Merrill Lynch.
They predicted the euro would trade at between $1.15 and $1.26 by the end of the year, with BNP Paribas saying it may fall below parity with the dollar in the first quarter of 2011, according to 43 forecasts compiled by Bloomberg.
The euro fell to the lowest against the dollar in more than four years on May 17 and is down 14 per cent this year as the fiscal crisis spreading from Greece undermined confidence in the currency.
Purchasing power parity, a measure of the relative cost of goods, indicates the euro remained 9.8 per cent overvalued against the dollar, based on data compiled by Bloomberg.
Even if Greece was forced to reschedule interest and maturity payments, it would remain within the European Monetary Union and retain the euro, said bankers in Athens.
