Do not get how Python iterates over a file

[tester_V]

well, could not get to sleep without trying it.
It prints just --1 and stops. I'm expecting the first 'for' loop will keep going but it stops.
Should print:
--1
--2
--3

with open("C:/01/file1.txt", 'r') as f:
    with open("C:/01/file2.txt", 'r') as fe:
        for line_f in f:
            #print(f"F1 >{line_f}")
            for line_fe in fe:
                #print(f"F2 >{line_fe}")
                if line_f == line_fe:
                    print(f"-- {line_fe}")