The nation of Portugal has for a very long time now known poverty and a debt straddled economy very well. Europe's efforts to help this nation have often fallen short of what it needed and has resulted in the small nation's economic problems intensifying. Portugal gives many investors pause as they consider whether or not to invest in Europe. These fears are intensified by the new strings attached to European bonds that now mandate investors shoulder financial burden from these bonds should there be losses in the future for Europe as a whole.
Such measures have served to only scare investors away and cast thick shadows of doubt on western Europe's ability to pay back its debts. This in combination with the troubling and often violent problems experienced in Portugal, France and now possibly Italy are scary to everyone involved. Portugal is a prime example of a country in the EU that simply has more debt than it can cope with, causing many to truly question the EU's sustainability as a whole.
The consequences for the Euro are enormous in the Forex currency exchange and coming years will probably see a dramatic drop in the Euro. In the short term it is anyone's guess as to which direction the currency will go in light of the persistent austerity measures being undertaken in many countries in the Euro Zone. Riots in countries such as France, Italy and of course Greece are beginning to foster doubt in more than just the European economy, but Europe itself.