Euro zone short-dated bond yields dropped after hitting fresh multi-year highs the day before as investors await Federal Reserve Chair Jerome Powell’s testimony later in the session.

Powell’s speech, due at 1500 GMT, might shape expectations for US monetary policy ahead of the FOMC meeting on 21-22 March, after Fed officials sent some dovish signals.

Germany’s 2-year yield, most sensitive to changes in policy rates expectations, dropped 6 bps to 3.249%.

At his last press conference, Powell said confidently a “disinflationary process” had begun, showing a “gratifying” corner had been turned even as he pledged the central bank’s fight against rising prices was not over.

Euro zone bond yields drop ahead of Fed Powell testimony

Atlanta Federal Reserve President Raphael Bostic said last week the Fed should stick with “steady” quarter-point rate increases to limit economic risks.

Germany’s 10-year yield, the bloc’s benchmark, dropped 7.5 bps to 2.651%.

Italy’s 10-year bond yield fell 10 bps to 4.45%.