The advice I usually hear is to always pay in the local currency, using a card that covers the transaction fee.

I’ve heard the following rule of thumb:

Your bank has an existing customer relationship with you, so they have more of an incentive to make you a good deal on currency conversion, lest you pack up and leave.

The ATM operator’s relationship with you is literally transactional. They don’t give a crap who you are and even less of a crap once the ATM dispenses the money.

Thus, your bank is less likely to fleece you than the ATM operator, so you’re better off leaving the conversion to your bank.

Don’t use a bank that charges $5 for currency conversion. If it’s anything more than an additional 1% it’s a shit bank. Always charge things in the local currency and let your bank do the conversion for +1%. Need cash? Hit a real bank ATM (not a shady kiosk one) with a debit card that refunds ATM fees and withdraw local currency for +1%. Currency conversion any other way is a complete ripoff, aside from ordering money from the bank before you leave.

I use my credit card which does the conversion for $0/0%