The weekend bailout deal for Cyprus has ignited fears among bank depositors, and currency investors have the shivers as well.
Adarsh Sinha, head of Asia Pacific G10 FX strategy at Bank of America Merrill Lynch, said the pain is not over.
"The risk is clearly to the downside, even from here," he told CNBC.
Sinha said investors were not focused on the Cyprus negotiations, so some of the immediate reaction is just an expression of shock. "There's a lot of confusion among the clients that I've spoken to about what's going on in Cyprus," he said. "To be honest, it is a big surprise."
(Read More: How Europe Stumbled Into Scheme to Punish Cyprus Savers)
The real issue with this admittedly small bailout package "is the precedent it sets," Sinha said. Investors are less concerned about the impact on Cyprus specifically, and the fact that depositors in Cyprus banks will have to take haircuts, than about the possibility that similar deals may be struck in larger euro zone economies. The implications are potentially enormous if investors lose faith more broadly in the euro zone banking system.