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Spain is trying to calm the markets and convince investors that its economy is still attractive in the long term. Indeed, Spanish bond yields have dropped from the highs seen, but that’s thank to external intervention from the ECB.

Jean-Claude Trichet bought bonds from Ireland and Portugal and that eased the pressure on Spanish bonds as well.

But troubles are far from over РThe Spanish Prime Minister, Jos̩ Luis Rodriguez Zapatero is under pressure from the EU and investors to make reforms, from supporters of his Socialist Party that oppose the reforms and from the opposition that calls for elections.

Regional elections are rolling out in Spain. Last week’s elections in Catalonia saw his Socialist party being ousted, losing to the local CiU party.

The yields on Spanish bonds are a good barometer for the European debt crisis and for the Euro.

For an outlook and technical levels see the  EUR/USD forecast.