By Naomi Rovnick and Alun John

LONDON (Reuters) – The euro could fall to the key $1 mark in the next month before rebounding, potentially alongside other European assets, given how negatively investors view the region, according to the chief investment officer of Europe's largest asset manager, Amundi.

U.S. stocks and the dollar have surged following Donald Trump's victory in the Presidential election earlier this month, while stocks outside the U.S. have struggled as investors balance the implications of higher U.S. growth with potential tariffs.

The euro has been one of the biggest casualties of the dollar's surge, retreating to around $1.05 from above $1.08 at the start of November.

"We could even see parity for the euro to the dollar in the next month, but it is very mechanical; there is a lot of demand for dollars linked to the surge in U.S. assets," said Vincent Mortier, chief investment officer at Amundi, which manages nearly 2.2 trillion euros of client funds.

"But then next year, we believe the euro will strengthen again," he added. Amundi forecasts the common currency to reach $1.16 by the end of 2025.

The euro last traded below $1 in late 2022.

Mortier noted that extreme negative sentiment towards Europe set the region's stocks up for a sharp rally on good news, similar to trends seen in China earlier this year when hopes for a major stimulus package prompted investors to buy unloved stocks.

"Catalysts for a European market recovery would include Germany responding to tariff risks with fiscal stimulus or Russia pulling back from Ukraine," he said.

Germany is set to hold elections in the coming months following the collapse of its ruling coalition in early November. A new government might consider reforms to its constitutionally enshrined debt break, which critics argue has contributed to its economic challenges.

Despite the challenges, Mortier highlighted the value in European government bonds and indicated that Amundi is purchasing 10-year U.S. Treasuries, anticipating that yields will fall from current levels. However, he expects short-term volatility in government bond markets.

Mortier remarked that U.S. stock valuations, buoyed by excitement over artificial intelligence, are unusually high and volatility is very low.

"The last thing you want is to be betting on only five or ten U.S. equity names," he cautioned. "We need to be very agile."