The euro plummeted to 1.1173 against the greenback at around 8:00 a.m. London time after starting the session at 1.1314. By midday London time it had trimmed some losses and was trading at 1.1207.
The 10-year benchmark German Bund yield, meanwhile, snapped back to 0.564 percent after closing Monday's session at 0.649 percent but also managed to pare some losses as the session progressed. Bond yields from peripheral countries – like Spain and Italy – were also sharply lower.
Stock markets on the continent were sharply higher, with the German DAX and French CAC seeing gains of around 2 percent.
Even the U.S. market felt the move from across the Atlantic. Longer-dated Treasury yields have ticked higher in recent weeks, pulled along by events in Europe. They also moved in Europe's wake on Tuesday, with the 10-year Treasury yield falling back to 2.2020 percent, down from a figure of 2.2373 percent, and was trading at 2.1897 percent by midday London time.
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"(We are aware) of seasonal patterns in fixed-income market activity with the traditional holiday period from mid-July to August characterized by notably lower market liquidity," Coeure said on Monday, according to a transcript released on Tuesday morning on the ECB's website.
"The euro system is taking this into account in the implementation of its expanded asset purchase program by moderately frontloading its purchase activity in May and June, which will allow us to maintain our monthly average of 60 billion euros, while having to buy less in the holiday period."