Yields on Italy's 10-year bonds topped 7% on Friday, continuing a steady rise after the European Central Bank's long-term liquidity operation earlier this week.
"Yields moving up shows Italian banks that took that capital are not reinvesting it in sovereign debt, and that's a concern," said Christopher Vecchio, a currency analyst at DailyFX.
Above 7%, "rates are unsustainable.
Countries won't be able to fund themselves in the future.
The euro still can't find traction if Italian bonds aren't improving."
Italy's 10-year yield tested 7%, Vecchio said, and lately traded down a little under that threshold. The euro slipped to $1.3041, from $1.3053 late Thursday.
The dollar index , which tracks the U.S. unit against six other currencies, traded at 79.982, up from 79.929 in late North American trade Thursday.
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