I wouldn't underestimate Portugal since they can surprise you sometimes. They are the current champions and they did defeat France to win the cup which is why they probably are high on confidence and morale.
In short tournament, surprise is possible and Portugal have quality to create surprise and protect their Championship. They are only not in the list of best candidates for the Championship of this Euro, I meant it.
The best candidates could be Belgium, France and Italy. Other big national teams have not shown their best but the Euro is in early days, and big teams will improve themselves when they go further in the tournament. The farther they go, the more confidence they have and they can create more surprise and beat all predictions.
"Tournament team" is a thing, all you have to do is not lose for like 5 games and you are in semi-finals or 6 games and you are in finals, it is not a long situation and if you know what you are doing as a tactic then there is a good chance even not a great team end up at a high level.
Many teams play a very good defensive strategy at these leagues when they know they are not great, and that results with either a draw or even a win if they get a good counter attack. That is why I think there is a good chance a team that is seemed like an underdog could end up at the higher place. Portugal could either end up at first two and go up, or they could be one of the best third places and still go up, which is why I think it is quite good that they are working hard, after that it is like just few games and you are at the top. Tournaments are a very different situation then leagues.