EUR/USD: SocGen doesn't expect euro to fall this month, but aims for parity by May

The Italians largely voted NO in the constitutional referendum. The polls did not anticipate such a gap. This suggests that it was not just a vote about constitutional reform. The anti-establishment wind is still blowing.

The EUR/USD briefly touched 1.0506 this morning but due to the fact that this vote was largely anticipated, there was not much enthusiasm to push the pair lower. The pair has since risen.

From the current levels, the forex will wait to see what happens in the fixed income markets, stock exchanges and rating agencies. The major event this week will be the ECB meeting with the likely announcement of the extension of the QE (but may be without a direct reference to the amount that will be bought every month after March, which would suggest a tapering).

Overall, we think it is unlikely that the euro will fall this month but we are still aiming for parity by the French presidential election on 7 May." says SocGen.