NEW YORK (MarketWatch) — The U.S. dollar’s eight-month long roller-coaster ride is about to head downhill, analysts at HSBC said Thursday.

Strategists at the British bank have raised their euro forecasts, becoming the first major bank to predict a resurgent euro by the end of next year. They now see the euro EURUSD, -0.06% rising to $1.10 by the end of next year — and $1.20 by the end of 2017.

That is a contrast with a dour forecast from Goldman Sachs issued just last week. Goldman updated their forecast, saying that they saw the euro hitting parity by September, and falling to 80 cents by year-end 2017.

Read: How low can it go? Goldman sees euro-dollar parity in September

“ “The party is nearly over. If you leave at 11:30 [p.m.]or 12 [a.m.], that’s a great evening. If you stay too long, you might run into trouble.” ” — David Bloom, global head of currency strategy at HSBC

HSBC’s David Bloom, one of the report’s authors, said that while the rally may have some more room to run, the fundamentals suggest that the market has already priced in easing abroad — and is underestimating the potential impact of slowing domestic growth.

“People are saying we don’t have to worry about data because the central banks are anchored — but currencies aren’t just about interest rate differentials, they’re not just about policy differentials,” Bloom said. “The U.S. economy is surprising to the downside aggressively. Don’t ignore it.”

From a technical perspective, the declines in the euro and Japanese yen have already outstripped the 20% depreciation that the dollar DXY, +0.03% saw during QE1 and QE2. Those moves are outlined in the below chart.

And according to HSBC’s calculations, the U.S. dollar is the second-most overpriced currency in the world after the Swiss franc, as the following chart illustrates.

To be sure, there are several risks that could keep the dollar stronger for longer, including a Greek exit from the eurozone, an emerging-market currency crisis and a policy mistake by Japanese central bankers, the analysts said.

But these risks are largely external, and don’t reflect the fundamental shift in the U.S., HSBC noted.

“As the Japanese say, ‘enjoy the party, but dance close to the exit’,” Bloom said. “The party is nearly over. If you leave at 11:30 [p.m.]or 12 [a.m.], that’s a great evening. If you stay too long, you might run into trouble.”

The dollar recorded its largest one-day drop against the euro since March 2009 Wednesday afternoon, after Federal Reserve policy makers implied that the Fed funds rate would rise more gradually than the market expected. It has since recovered about half of its losses.