The euro is trading heavily near 1.0450. A break below 1.0350 would open up additional losses toward parity, economists at BBH report.

Fragmentation fears have risen in the wake of the ECB decision

“The break below 1.0515 sets up a test of the May 13 low near 1.0350 and after that, we have to start talking about parity.”

“We think the rising risks of fragmentation are a major factor behind subsequent euro weakness. Markets were very disappointed by the lack of any concrete measures to address peripheral spreads, which are making new cycle highs as a result. Reports had hinted at some sort of new emergency bond-buying program but all we got was a pledge to use PEPP reinvestments to address the issue. That wasn't enough and so the euro is plumbing new depths.”