France's presidential election is being nervously watched by investors, who are quietly preparing for the aftershocks of a possible upset by far-right leader Marine Le Pen (Other OTC: PENC - news) or leftwinger Jean-Luc Melenchon, both arch-critics of the EU.
"Who will govern? That's not really the question... Above all, what we are trying to assess is the risk for the euro," Samy Chaar, economist with the Geneva-based private bank Lombard Odier told AFP.
"Any question mark over the euro, the world's second most-used currency in terms of trade flows and savings, would constitute a huge risk for international investors and their clients," he said.
Investors most fear a victory by the virulently anti-EU Le Pen, who wants to exit the euro and hold a referendum on France's membership of the union.
Analysts say that coming after Brexit, a "Frexit" could bring down the curtain on seven decades of European integration.
"Should the FN (National Front) succeed in taking France out of the eurozone the impact on the French and European economies would be difficult to overestimate," Diego Iscaro, principal economist at IHS Markit (Stuttgart: A1139A - news) research group, wrote in a note.
Polls currently show Le Pen and pro-EU centrist Emmanuel Macron most likely to go through from Sunday's first round to the May 7 runoff but Communist-backed firebrand Melenchon and pro-EU conservative Francois Fillon have narrowed the gap, making for a tight four-way race.
While forecasts show Le Pen being defeated in the runoff, the euro could also take a battering if Melenchon emerges as France's surprise next leader.
Melenchon has threatened to pull France out of EU treaties if Brussels does not agree to scrap rules on fiscal discipline, adopt protectionist trade policies and review the independence of the European Central Bank -- demands seen as anathema to Germany.
"Markets like to scare themselves," he said, but so far there was "no sign of people hedging their bets or speculating."
Financial analysts said the show of sang-froid was the product of weeks of research by banks and analysts into the workings of the French constitution and electoral system.
They noted that even if FN leader Le Pen were elected it would be very difficult for her to take France out of the EU or euro without having a parliamentary majority -- something she would struggle to muster -- or changing the constitution.
- 'Black swan' scenario -
Christophe Dembik, head of macroeconomic analysis at Saxo Bank, described the atmosphere in trading rooms as "calm".
"But we need to be cautious because we don't want a repeat of (the fallout from) Brexit and the election of Donald Trump," he said.
Dembik called the prospect of a second-round duel between Le Pen and Melenchon a "black swan", jargon for a highly improbable event that would have a massive impact on markets if it occurred.
Some analysts fear it would spark a run on French banks and a sudden downgrading of France's debt that would push up its borrowing costs.
Benoist Lombard, managing partner of French wealth management firm Witam MFO, said he feared a possible capital flight to other eurozone members.
"Clients recently have been showing strong interest in (low-risk investment products) in Luxembourg, because they want to ensure their investments remain in euros," he told AFP.
- Installing 'airbags' -
Faced with the difficulty of forecasting the outcome of the first round and, beyond that, the runoff, most investors and wealth managers have already implemented safeguards.
"Everyone is getting ready in the same way," Chaar said. "Without necessarily changing the structure of their portfolios they're adding airbags that don't cost very much if all goes well but could yield returns if things go badly."
Some investors are falling back on strong currencies, like the Swiss franc, while others are taking out insurance to protect their euro investments against turbulence.
More than a sense of panic, analysts said foreign investors were showing signs of "weariness" with the euro after years of turbulence caused by wrangling over bailout deals.
"Some tell us it is the last time they will invest in euros because they are tired of the euro being in peril," one trader said.