Euro Pulls Back From 3-week Highs as Italian Real Yields Approach Zero

Euro Pulls Back From 3-week Highs as Italian Real Yields Approach Zero
A Euro banknote is seen placed on U.S. Dollar banknotes in this illustration taken on Nov. 28, 2021. Dado Ruvic/Illustration/Reuters
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LONDON—The euro weakened on Tuesday after European Central Bank President Christine Lagarde tried to rein in interest rate hike expectations that lifted the currency to a three week-high last week.

The ECB’s hawkish twist last week took markets by surprise and sent yields on peripheral eurozone debt surging as investors worried about the impact of faster-than-expected monetary tightening on the bonds of the most indebted countries.