Spain’s nine-month Letras auction saw a slight drop in yield, falling from 1.999% to 1.998%. This small change reflects current financial feelings amid global trade issues. Gold has hit a new peak, trading over $4,700, mainly due to rising geopolitical tensions and trade war worries. As gold prices go up, the US Dollar has decreased, pushing investors to seek safer assets.

Currency Changes During Uncertainty

At the same time, many currency pairs have fluctuated due to global economic doubts. EUR/CHF moved toward a four-week low as trade tensions supported the Swiss Franc, while EUR/USD rose to a two-week high above 1.1700. Bitcoin fell below $91,000, as concerns over Greenland impacted market trends. Additionally, Trump’s recent tariff threats on European goods could significantly influence future market conditions. We should keep in mind last year’s “Sell America” trend, driven by rising trade conflicts over Greenland and major geopolitical stress. This situation caused the US Dollar to weaken against almost all major currencies. The big question now is whether this trend is over or just taking a break.

US Dollar and Eurozone Worries

Recent US inflation data for December 2025 showed a stubborn rate of 3.1%, making it unlikely for the Federal Reserve to announce rate cuts soon, which helps stabilize the dollar. This contrasts sharply with last year’s aggressive dollar selling. Derivative traders should be careful about betting on further dollar weakness and may want to use options to guard against a potential reversal. The euro’s rise above 1.1700 last year was notable, but the situation is changing. Last week, the Eurozone’s flash manufacturing PMI fell to 43.5, indicating a deeper contraction that might push the European Central Bank to take a softer approach than the Fed. This difference suggests that selling EUR/USD futures or buying puts on the pair could be smart moves in the coming weeks. Gold’s remarkable rise to over $4,700 an ounce was largely due to fears from last year’s trade war. Typically, major geopolitical risk premiums decline once immediate threats lessen, as seen after the initial shocks of 2008 and 2020. With current tensions more stable, traders appear to be selling out-of-the-money call options to collect premiums, betting that such high prices won’t be reached again soon. The market’s memory of last year’s chaos keeps implied volatility high, with the VIX index above 18. The slight drop in Spain’s nine-month bond auction yield shows ongoing but stable interest in safe assets. We believe that buying protective put options on major equity indices is a smart way to guard against any sudden return to the instability we saw throughout 2025. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now