The euro pared gains against its major counterparts on Tuesday, following remarks on debt restructuring of Greece by a senior European finance official.

EUR/USD fell to a session low of 1.4123 during European trading, after pulling back to 1.4202 from a 7-week low of 1.4048 hit on Monday.

Earlier on Tuesday, the leader of Ecofin Jean-Claude Juncker said that there was a need for “soft restructuring” of Greece debt.

The single currency came under pressure in recent sessions, amid concerns over debt problems in peripheral nations in the eurozone. The arrest of International Monetary Fund’s (IMF) chief Dominique Strauss-Kahn in New York on allegations of sexual assault also added to debt woes of the region.

“The mechanics of the IMF lending programs to Greece, Ireland and now Portugal will not be affected by the arrest, but negotiations between the EU, IMF and Greece on how to deal with Greece's funding gap in 2012 (and possibly beyond) will need strong leadership, given the reluctance of some northern European countries to further contribute to Greece's rescue,” said a note from Standard Chartered on Tuesday.

 The two-day meeting of Eurogroup/Ecofin Ministers approved a 78 billion euro ($110.3 billion) for the bailout of Portugal on Monday.

“We don't expect any big decisions on Greece until the June meetings at the earliest. Schaeuble made clear over the weekend that if Greece cannot return to capital markets in 2012, then further measures must be discussed. Greece still has to pass its medium-term budget plan (2012-15) through Parliament so any deal is highly unlikely before then,” said RBC Capital Markets.

The euro also trimmed gains against the Japanese yen, with EUR/JPY dropping from a 4-day high of 116.22 to hit 115.43.

The Bank of Japan’s (BoJ) governor said on Tuesday that the country is in a “very severe state” due to the earthquake, triggering speculations over further monetary easing.

Elsewhere, the British pound rose against the euro and the greenback, after an official report showed that inflation in the country increased more-than-expected in April, raising expectations over the hike in interest rates.

GBP/USD was up 0.26 percent to hit 1.6234, while EUR/GBP fell 0.1 percent to trade at 0.8732.

The UK Office of National Statistics said the consumer price index (CPI) rose 4.5 percent in April, while the markets had expected CPI to rise to 4.1 percent. The core CPI increased to 3.7 percent against the analysts’ expectation of increase to 3.4 percent in April.

“In 2012, the rate should drop sharply as the basis effect from the VAT increases drops out of the calculation but there is little chance of it returning to the target rate of 2% until the end of the next year. This is too long to wait and so the MPC needs to start gently increasing interest rates, even with the lackluster growth outlook,” said Societe Generali in a note.