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Portugal Bailout – 7%Yields Mark the No Return Point?

Portugal is under pressure to take a bailout, despite denying it. Portuguese bond yields traded in a choppy manner, as the Euro dropped lower. Tracy Alloway, at Alphaville, reminds us of the previous bailouts through charts – 7% yields on ten year notes were the point of no return. Portuguese bonds already passed this mark briefly.  Here’s the analysis.

Reports that Germany and France are pushing Portugal to take a bailout have appeared during the weekend, and were denied, at least now. The markets opened the week with a lower Euro/Dollar. It went as low as 1.2873 in early trade before recovering and now returning back to 1.2885.

A bailout for Portugal has already been thought of – the small nation was already marked as the next domino. The big European countries and the EU officials want to avoid a bailout for Spain – the Euro-zone’s fourth largest economy, that has a load of debt which the current bailout fund cannot capacitate.

For more on the Euro, including technical analysis, see the EUR USD forecast.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.