there's a research option in the Magic tree that gives you "Dispel Enchantment" (not sure the name, but I think it's at the same level as Heroes).  Cast that on your cursed city.

Negative enchantments never show up in the Enchantments list, but you should get a message about which city it was cast on, and you need to use Dispel Enchantment on that city.  If there is truly no way to dispel it, that should definitely be changed, but the biggest issue is that the UI doesn't effectively show negative enchantments.