The dollar’s rebound is good news for shares in European exporters, just as companies enter the busiest stretch of the third-quarter reporting season.

The euro has fallen more than 5% against the greenback this year and roughly 2% in the past month alone, a boon for firms that sell to customers outside Europe. It’s a reversal of the headwind that held back profits for these stocks earlier in 2026, and some strategists say it has yet to be fully factored in by the market.

A UBS Group AG basket of stocks exposed to US sales, including the likes of Novo Nordisk A/S, Diageo Plc, GSK Plc and Rentokil Initial Plc, has rallied almost 8% this month, the most since July 2022.

Companies representing nearly 40% of the Stoxx 600’s market capitalization are reporting this week and next. A weaker euro is a handy boost for an index whose members generate roughly half their revenue overseas.

Strategists at HSBC Holdings Plc estimate that a 5% depreciation in European currencies against the dollar can add about 3.1 percentage points to regional earnings growth. But even a relatively small currency impact can make a difference in a market buffeted by negative news.

With sentiment on edge, investors are looking to earnings for signs of stability, according to Michael Field, Morningstar’s head of European equity strategy.

A weaker euro may help by “turning some meets into beats,” Field said. “There is an awareness of how much it’s bringing to the table, but I still don’t think it’s fully in the price.”The benefit may be greatest where earnings expectations are subdued. Field cited consumer companies including Unilever Plc and Nestle SA, where weaker demand and higher costs have weighed on the outlook. “That extra bump from FX could actually make a huge difference,” he said.

European healthcare is another potential beneficiary, generating roughly 40% of its revenue in the US, the highest among Stoxx 600 sectors. Oddo BHF estimates the recent dollar move could add 2.5%-3.5% to Novo Nordisk’s earnings per share and 2%-3% at Sanofi SA. Both report within the next two weeks.

Currency effects also mean fund managers can find stock opportunities in countries where broader economic conditions look less appealing.

“I may have a cautious view of the UK and European economies over the next few years,” said Dan Hanbury, a global equity portfolio manager at Ninety One. “However, that is very different to being cautious on their stock markets given how much of the revenue is made overseas.”For all that, what benefits Europe’s international earners isn’t necessarily good for the market as a whole.

European equities have historically tended to outperform other regions when the euro strengthens, according to Jitania Kandhari, deputy chief investment officer at Morgan Stanley Investment Management. That partly reflects the region’s large weighting toward domestically exposed financials, which benefit from the stronger purchasing power, economic activity and credit growth associated with a stronger euro.

“You really need euro strength for the aggregate MSCI Europe to outperform on a relative basis,” Kandhari said. A sustained decline would make her more cautious on parts of southern Europe, where domestic financials carry significant weight.

At the individual-stock level, the picture gets more complicated still. Adidas AG and Puma SE have dollar-denominated Asian sourcing meaning sustained greenback strength can ultimately hurt margins, while sophisticated hedging can delay or mute the benefit for exporters.

Hanbury points to Rolls-Royce Holdings Plc, among his firm’s top picks, where a large hedge book covers multi-year airline servicing contracts.

“The problem is timing and hedging and it’s never as exact as you’d like it to be,” Hanbury said. “Hedging creates a lag in the numbers coming through.”For longer-term investors, that complexity makes currency another risk to manage rather than the basis for an investment thesis. Rathbones fund manager David Coombs said he is willing to tolerate short-term foreign-exchange volatility in globally diversified businesses such as L’Oreal SA, but becomes more cautious when several holdings leave a portfolio exposed to the same currency.

“The currency is the last decision in the chain,” Coombs said, adding that it’s difficult to forecast its impact on overall profits and returns.

The euro’s continued weakness potentially sets up a further earnings boost. Elias Haddad, global head of markets strategy at Brown Brothers Harriman, sees scope for the currency to weaken toward $1.10 by year-end as US economic outperformance and interest-rate differentials continue to favor the dollar.

The reason behind any further weakness still matters. A euro falling because of strong US growth has different implications for European assets than a decline caused by investors demanding a higher risk premium at home.

French fiscal stress can boost exporters’ translated earnings through a weaker currency while simultaneously pushing up sovereign spreads, financing costs and the price of dollar-denominated imports.

The current French episode may stop short of that more damaging scenario. Morgan Stanley’s Kandhari sees France’s fiscal turmoil as a repricing rather than another euro-zone crisis. The country’s fiscal problems are well understood and the European Central Bank now has significantly stronger tools to manage contagion, she said.

The overall setup could leave European equities in something of a sweet spot: enough currency weakness to create upside earnings surprises, without overwhelming the domestic forces supporting the broader market. The result could be a foreign exchange boost that reaches well beyond the exporters benefiting from it directly.