Silver (XAG/USD) rose on Thursday, based on FXStreet data. It traded at $84.52 per troy ounce, up 1.62% from $83.18 on Wednesday. Since the start of the year, silver prices have increased by 18.91%. The price was $2.72 per gram.

Gold Silver Ratio Update

The Gold/Silver ratio was 61.28 on Thursday, down from 61.73 on Wednesday. The ratio measures how many ounces of silver equal the value of one ounce of gold. Silver is traded as a precious metal and is used as a store of value and a medium of exchange. It can be bought as coins or bars, or traded via products such as exchange-traded funds that track its price. Price drivers include geopolitical risk, recession concerns, interest rates, and moves in the US Dollar because silver is priced in dollars. Supply from mining, recycling rates, and demand levels can also affect the price. Industrial use in electronics and solar energy can shift demand and price levels. Silver often moves in the same direction as gold, and the Gold/Silver ratio is used to compare their relative values.

Market Outlook And Positioning

Given the sharp 18.91% rally since the beginning of the year, we must acknowledge the strong upward momentum currently driving silver. This move has been largely fueled by the Federal Reserve’s policy pivot, as we finally saw the start of interest rate cuts in the fourth quarter of 2025. A weaker dollar environment resulting from this policy shift has provided a significant tailwind for the metal. This price strength is not just a monetary story; it is heavily supported by robust industrial demand. We saw global solar PV installations set a new record in 2025, consuming over 190 million ounces of silver according to preliminary industry data. This sustained demand from the green energy sector, combined with a rebound in electronics manufacturing, is creating a solid price floor. The Gold/Silver ratio has now compressed to 61.28, a level indicating silver’s dramatic outperformance relative to gold over the past few months. Historically, when we saw the ratio dip this low back in 2021, it was followed by a period of consolidation. This suggests the easiest gains in the silver catch-up trade might be behind us for the immediate term. With the price now above $84, implied volatility in silver options is likely elevated, presenting opportunities. Data from late February 2026 showed managed money net-long positions in silver futures reaching their highest point in over a year, a condition that can sometimes precede a short-term pullback. Traders could consider buying protective puts against physical holdings or using strategies like call credit spreads to take a cautiously neutral-to-bearish stance in the coming weeks. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

Euro area unemployment fell to a record-low 6.1% in January, down from 6.3% in December. The number of unemployed people dropped by 184k, mainly in Italy, Spain and France. The data has been revised often, so the January fall may change. A lower jobless rate can be read as a more hawkish signal for the ECB.

Unemployment Outlook In 2026

Danske Research expects unemployment to fall more slowly in 2026 as labour demand cools. Employment growth is still expected to continue in Southern Europe, especially Spain. The final euro area PMI for February was confirmed at 51.9. Services was revised up to 51.9 and manufacturing stayed at 50.8, pointing to moderate growth. The record-low unemployment of 6.1% reported for January is making markets think the European Central Bank will have to stay hawkish. This is a signal that wage pressures could remain, potentially keeping inflation from falling to target. Consequently, we are seeing interest rate markets push back the timing of the first expected rate cut further into 2026. However, we need to be careful not to overreact to one sharp data drop, as these figures are frequently revised. The latest Euro Area flash inflation estimate for February 2026 came in at 2.4%, showing that disinflation is continuing, even if it is a bit sticky. This conflicts with the strong jobs report and suggests the ECB may not be as worried as the headline unemployment number implies.

Rates Volatility And Relative Value

Given this conflict between a strong labour market and cooling inflation, volatility in short-term interest rate derivatives is a key area to watch. We saw a similar situation in mid-2025 when a strong jobs report led to a bond sell-off that quickly reversed when softer data followed. Selling volatility right now seems risky; it might be better to position for a range-bound market that is prone to spikes on new data releases. The underlying growth picture, with February’s PMI at a moderate 51.9, also supports the view that the labour market will cool gradually. The divergence between stronger service-based economies in Southern Europe and the more sluggish manufacturing core creates opportunities. Traders could look at spread trades, for instance, favouring Spanish assets over German ones, to play this regional difference. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

EUR/CAD slipped back towards 1.5850 in European trading on Thursday, after a flat session. The move came as the Canadian Dollar found support from firmer oil prices. WTI rose for a third session and traded near $75.00 a barrel. Prices were lifted by supply disruptions linked to the Middle East conflict.

Middle East Tensions And Oil Supply

US and Israeli strikes on Iran raised tensions, followed by Iranian attacks on energy infrastructure. Disruption has affected oil and gas flows, with the Strait of Hormuz handling about 20% of global oil and LNG supply. The Euro eased ahead of January Eurozone Retail Sales data due later in the day. Annual sales are forecast to rise 1.7% after 1.3%, while the monthly figure is seen at 0.3% after a 0.5% fall. ECB Governing Council member François Villeroy de Galhau said the ECB is monitoring energy markets during the war. He said the length of the conflict will affect prices and that there is no current reason to raise interest rates. The euro is used by 20 EU countries and made up 31% of global FX transactions in 2022, with average daily turnover above $2.2 trillion. EUR/USD accounts for about 30% of trades, followed by EUR/JPY 4%, EUR/GBP 3%, and EUR/AUD 2%.

How The Picture Has Changed Since Early 2025

Looking back at the analysis from early 2025, we saw Middle East tensions driving oil prices and weakening the EUR/CAD pair. Today, the fundamental story remains but has evolved, with the pair now trading much lower near 1.4580. This is less about conflict-driven supply shocks and more a result of sustained high energy prices, as WTI crude holds firm above $82 per barrel. The policy gap between the central banks has widened significantly since we saw the ECB holding steady in 2025. With Eurozone inflation now just under the 2% target, markets are pricing in an ECB rate cut by April. In contrast, the Bank of Canada is holding its rate at 3.5% due to a stronger domestic economy, a key factor supporting the Canadian Dollar. For derivative traders, the environment has become one of low volatility, a stark contrast to the uncertainty of early 2025. Three-month implied volatility for EUR/CAD has compressed to near 5.8%, its lowest point in over a year. This suggests that strategies selling options, like short strangles or credit spreads, could be favorable to capitalize on the steady downtrend and decaying time value. Unlike the focus on Eurozone retail sales we saw in the past, upcoming Canadian trade balance data is now more critical. Given robust energy exports, another strong surplus is expected, which would further bolster the CAD. Consequently, we see traders positioning for further downside in EUR/CAD by buying put options with strike prices below 1.4500. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

Italy’s retail sales (not seasonally adjusted) rose 2.3% year on year in January. This was up from 0.9% in the previous period. The data shows faster annual growth in retail sales compared with the prior reading. No further breakdown was provided in the update.

Implications For Growth Outlook

The January 2026 retail sales data from Italy, showing a jump to 2.3% year-over-year growth, is a notable signal of consumer strength. This acceleration from the modest 0.9% we saw at the end of 2025 suggests the Italian economy has more momentum than we initially priced in. We need to reposition for the possibility that broader Eurozone growth forecasts will be revised upwards. This unexpectedly strong consumer activity in the Eurozone’s third-largest economy will likely make the European Central Bank more cautious about cutting interest rates. With the latest Eurozone HICP inflation data still hovering at 2.6%, well above the ECB’s target, this retail report adds to the case for holding rates steady through the second quarter. Therefore, derivatives linked to short-term euro interest rates, like Euribor futures, may see prices fall as expectations for a near-term rate cut diminish. We should consider adding bullish exposure to the Italian equity market, possibly through call options on the FTSE MIB index. When we saw similar positive data surprises back in mid-2025, consumer discretionary and luxury goods stocks led the subsequent rally for several weeks. This pattern suggests focusing on options for specific companies in those sectors that have high domestic revenue exposure. For fixed income, this data puts upward pressure on Italian government bond yields. We anticipate that Italy’s 10-year BTP yield, which has already climbed to 3.95% over the last month, could test the 4.10% level. Traders should consider buying put options on BTP futures to hedge against or profit from a drop in Italian bond prices. This positive data shock may also increase short-term volatility in European markets as traders reassess economic outlooks. Watching the VSTOXX index, which currently sits near a six-month low of 13.5, for a potential spike is prudent. We could use VSTOXX call options as a relatively cheap way to hedge our broader European equity portfolios against a potential overreaction in the coming weeks.

Risk Management Considerations

Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

Italy’s retail sales rose by 0.2% month on month in January, based on the expected figure. The reported result was a fall of 0.8% over the same period. This means retail sales were 1.0 percentage point lower than forecast. The data indicates consumer spending weakened in January compared with the previous month.

Implications For Growth And Recovery

This sharp drop in Italian retail sales for January signals a weakening consumer, which is a significant concern for the Eurozone’s third-largest economy. We must now question the strength of the anticipated economic recovery for the first quarter. This data point, being a hard miss, suggests downside risks are increasing. This weakness in Italy adds to a broader pattern we are seeing across the continent. With the latest February flash CPI for the Eurozone coming in at 1.9%, just under the ECB’s target, this retail sales figure gives the central bank more reason to consider a dovish pivot. We see this increasing the probability of a rate cut before the third quarter. Given this outlook, we should consider strategies that benefit from a falling Euro. Buying EUR/USD put options with expirations in the next one to two months offers a way to position for further currency weakness. The recent dip in Italian manufacturing PMI to 49.2 already showed industrial contraction, and this consumer data confirms the trend. For equity exposure, this is a clear negative for Italian domestic stocks. We should look at shorting FTSE MIB index futures or buying puts on ETFs that track Italian equities. Consumer discretionary and retail sector stocks within that index are likely to be the most vulnerable in the coming weeks.

Volatility And Hedging Considerations

Looking back at the market reactions in 2025, similar disappointing data from a core European country often preceded a spike in volatility. The Euro Stoxx 50 Volatility Index (VSTOXX) is currently trading near 14, a level that has historically been cheap ahead of downturns. Buying VSTOXX futures or call options could be an effective hedge against broader European market turbulence. For those of us with existing long positions in European assets, this is a signal to review our hedges. Protective puts on broad indices like the Euro Stoxx 50 are now more attractive. This single data point from Italy could be the canary in the coal mine for a wider slowdown. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

BNY strategist Geoff Yu said European natural gas futures have repriced far above the levels used in recent ECB staff projections. He said this could push Eurozone inflation above the ECB baseline and raise the chance of rate rises even as growth risks increase. The natural gas futures curve had previously implied only a modest rise over the next five quarters, while the ECB baseline assumed lower gas prices this year. By Wednesday, the benchmark curve had shifted to an average price baseline nearly 45% above last Friday’s level and close to 60% above the original assumption.

Gas Prices Now Far Above Baseline

Yu said these prices sit in the high-90th percentiles and could mean HICP runs about 100bp above baseline. He said markets are therefore pricing a greater risk of rate hikes, potentially earlier than other central banks. He also pointed to possible downside for Eurozone assets and lower real rates. The article notes it was produced with an AI tool and reviewed by an editor. The sudden repricing of European natural gas futures is dramatically shifting the landscape for ECB policy. The Dutch TTF benchmark has surged to over €45 per megawatt-hour, a price level that is almost 60% higher than the assumptions embedded in the central bank’s recent projections. This move completely overshoots the modest increases that were already making policymakers uncomfortable. The current futures curve suggests Eurozone HICP could now run about one percentage point above the ECB’s baseline assumptions. This is a significant deviation, especially as the February 2026 flash inflation estimate already showed a sticky 2.4%, resisting a swift return to the 2% target. The energy component, which we saw drive inflation throughout 2025, is again becoming the primary threat.

Markets Shift Toward Hikes

As a result, the market is quickly pricing in the material risk of rate hikes later this year, a sharp reversal from previous expectations. This recognizes an emerging stagflation risk, where the ECB might be forced to tighten policy into a slowing economy, which would not be beneficial for local assets. We are already seeing this reflected in interest rate swaps, which have erased the probability of a mid-year rate cut. This situation contrasts sharply with the outlook during 2025, when moderating energy costs allowed for a clear path toward monetary easing. The greater risk now is a fiscal overreaction from governments to shield consumers, which would only add to inflationary pressures. Such a scenario would further depress real rates across the Eurozone. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

The Japanese yen gave up early gains and fell against the US dollar during European trading on Thursday. USD/JPY rose to about 157.35 as the dollar moved higher after a brief pullback. The US Dollar Index (DXY) was up 0.4% at about 99.15. The dollar strengthened after US ADP jobs and ISM Services PMI data for February came in above forecasts.

Us Data Lifts Dollar

ADP said the US private sector added 63K jobs in February, above estimates of 50K and the prior 11K. ISM Services PMI rose to 56.1, versus expectations of 53.5 and January’s 53.8. The report said traders reduced bets on Federal Reserve rate cuts at the July meeting. It cited the CME FedWatch tool, which showed the odds of the Fed holding rates in July at 50.2%, up from 37.9% on Tuesday. The dollar also found support from demand for safe-haven assets amid Middle East tensions. The report said Tehran denied claims that it is willing to discuss a truce. The yen weakened versus the dollar but rose against other currencies, as it also benefited from safe-haven demand. The publisher issued corrections at 10:27 GMT and 11:15 GMT.

March 2025 Market Echoes

We remember last year, around this time in March 2025, when strong US data pushed the odds of the Fed holding rates to over 50%. That dynamic sent the USD/JPY pair toward 157.35 as traders unwound their bets on policy easing. The US Dollar’s strength was clear, and that trend has only accelerated over the past twelve months. Looking at the situation now, the Federal Reserve did not cut rates in July 2025 and has maintained its restrictive stance ever since. The latest economic data reinforces this, with headline CPI currently tracking at a stubborn 3.1% and the last non-farm payrolls report showing a robust addition of 275,000 jobs. This persistent economic strength makes Fed rate cuts unlikely in the near term, continuing to favor the dollar. That policy divergence ultimately pushed the dollar well past the 160 yen level later in 2025, a zone we are still trading above. The interest rate differential between the US and Japan remains the single most important driver for this currency pair. As long as this gap exists, the path of least resistance for USD/JPY is upwards. For the coming weeks, derivative traders should consider strategies that benefit from continued, albeit perhaps slower, yen weakness. Buying out-of-the-money call options on USD/JPY offers a way to position for further upside with defined risk. Implied volatility has been rising, suggesting the market expects more movement, making long volatility positions potentially profitable. Meanwhile, the Bank of Japan has only offered verbal interventions, as we saw throughout last year, without making significant policy shifts to strengthen the yen. Any actual intervention would likely create a temporary dip, which could present a better entry point for long dollar positions. This pattern of talk without action has conditioned the market to sell into any yen strength. The safe-haven demand we saw from Middle East tensions in early 2025 has since been overshadowed by the dominant theme of interest rate differentials. While geopolitical risk remains a factor, the carry trade of borrowing cheap yen to buy high-yielding dollars is too compelling. Therefore, traders should focus on the economic data releases from the US for direction. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

Austria’s gross domestic product (GDP) growth rate quarter-on-quarter was 0% in the fourth quarter. This followed 0.2% growth in the previous quarter. The change means output was flat compared with the prior three months. The earlier quarter recorded a modest increase.

Austria Growth Signals Stagnation

The drop in Austria’s fourth-quarter 2025 growth to zero is a clear signal of economic stagnation that we must act on. This figure confirms the slowdown we suspected and increases the probability of a technical recession in the first half of 2026. We should therefore start building bearish positions on Austrian-exposed assets. This is not an isolated issue, as Germany, the region’s largest economy and Austria’s main trading partner, reported a 0.3% contraction for the same late-2025 period. This wider Eurozone weakness gives us more confidence to short broader European indices like the Euro Stoxx 50. The Sentix Economic Index for the Eurozone recently fell to -15.1, further supporting this negative outlook. Such poor growth figures put downward pressure on the Euro. We see this as a catalyst to increase short positions in the EUR/USD pair, which has been struggling to hold above the 1.0700 level. Data from early 2026 already shows a build-up of speculative shorts against the currency as rate-cut expectations grow. We anticipate a rise in market volatility as a result of this economic uncertainty. The V2X index, which measures Euro Stoxx 50 volatility, has already climbed by 8% in the last month. Buying call options on the V2X or establishing straddles on the Austrian ATX index are viable strategies to profit from the expected increase in price swings.

Implications For ECB Policy

This economic weakness will likely force the European Central Bank to adopt a more dovish stance. After a series of rate hikes throughout 2025 to combat inflation, these growth numbers shift the focus to economic support. We are now pricing in a higher probability of an ECB rate cut before the third quarter of 2026, and we are adjusting our interest rate futures positions accordingly. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

USD/CAD was flat near 1.3645 in the European session on Thursday, as a firmer US Dollar offset a steadier Canadian Dollar. The pair hovered near its 20-day EMA at about 1.3665. The US Dollar Index was up 0.2% near 99.00 after a pullback from 99.67 on Tuesday, a three-month high. A New York Times report about Iran’s willingness to talk was later denied by Tehran, which also threatened a prolonged war, supporting demand for safe-haven assets.

Us Data Reinforces Dollar Demand

US data also supported the Dollar. ADP showed 63K private-sector jobs in February versus 50K expected and 11K previously, while ISM Services PMI rose to 56.1 versus 53.5 expected and 53.8 in January. The Canadian Dollar stayed supported by higher oil prices linked to the Middle East conflict, as Canada is the largest oil exporter to the US. Against other currencies, the CAD traded firmer. The 14-day RSI stayed in the 40.00–60.00 range and below 50. Support is at 1.3632, then 1.3558–1.3559 and 1.3490, while resistance is at 1.3720. Looking back to this time in 2025, we saw the market caught between conflicting forces, holding USD/CAD steady around 1.3645. The US-Iran conflict was creating a tug-of-war, with risk-off demand supporting the US dollar while simultaneously pushing oil prices higher to the benefit of the loonie. This created a period of consolidation that derivative traders found challenging.

Shift To Diplomacy And Rate Divergence

The geopolitical landscape has since shifted from active conflict to tense diplomacy, removing the immediate war premium from markets. West Texas Intermediate (WTI) crude oil is now trading at approximately $82 per barrel, which is notably higher than the sub-$80 levels seen during the peak tensions in early 2025. This sustained strength in energy continues to provide an underlying bid for the Canadian dollar. Last year’s economic data showed a surprisingly strong US ISM Services PMI of 56.1, which fueled US dollar strength. Today, we see a more moderated picture, with the February 2026 ISM Services report coming in at a still-expansionary 52.8. This indicates a cooling from the post-pandemic highs but reflects a resilient US economy. The labor market story has also changed significantly from the weak ADP report of only 63,000 jobs in February 2025. The most recent Non-Farm Payrolls report showed a robust gain of 195,000 jobs, reinforcing the Federal Reserve’s cautious stance. This economic divergence has helped push the US Dollar Index (DXY) to around 103.50, a stark contrast to the 99.00 level it flirted with last year. This dynamic suggests traders should consider the widening interest rate differential as a primary driver. The Bank of Canada has begun a modest easing cycle while the Federal Reserve remains on hold, creating a favorable carry for holding US dollars. Therefore, using options to define risk, such as buying call spreads, could allow traders to position for a gradual grind higher in USD/CAD while being protected from sharp reversals caused by oil price volatility. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account

Gold rose for a second day on Thursday as demand increased during the Middle East war. US and Israeli strikes in Iran, and Iranian missile and drone attacks across the region, continued the crisis. A US submarine reportedly sank an Iranian warship off Sri Lanka. US Defence Secretary Pete Hegseth said it was the first such attack on an enemy since World War II, and the campaign entered its sixth day.

Gold Gains From Weaker Dollar

Gold demand also grew as the US Dollar weakened, which makes dollar-priced Gold cheaper for non-US buyers. The New York Times, cited by Reuters, reported Iran’s Ministry of Intelligence signalled the CIA about possible talks, but Tehran later denied it. The US is set to impose a temporary 15% global tariff, replacing a 10% rate introduced after the Supreme Court invalidated most earlier levies. Treasury Secretary Scott Bessent said the rate could return to earlier levels within five months as new trade probes proceed. Higher oil and gas prices raised inflation concerns and reduced expectations for Federal Reserve rate cuts. The US 10-year Treasury yield rose for a fourth session to 4.11%. Gold traded near $5,160 and held above $5,150, staying in an ascending channel. The nine-day EMA is $5,163, the channel support is $5,070, the 50-day EMA is $4,874, resistance is $5,470, and the record high is $5,598 from 29 January; the 14-day RSI was in the mid-50s. Central banks added 1,136 tonnes of Gold worth about $70 billion in 2022, the highest on record. Gold often moves against the US Dollar and US Treasuries, and can rise when interest rates fall.

Options Strategies In High Volatility

Given the ongoing conflict and its impact on markets, we should anticipate continued high volatility in gold. With the gold volatility index (GVZ) surging to levels we haven’t seen since the banking turmoil of 2023, buying call options will be expensive. Therefore, traders should consider using call spreads to bet on further upside while managing the high cost of premiums. A potential strategy involves buying an April call option with a strike price just above the current market, perhaps around $5,200, and simultaneously selling a call with a strike near the channel’s upper boundary around $5,450. This approach lowers the initial cost and provides a solid potential return if gold continues its ascent as the crisis unfolds. It effectively trades unlimited upside for a higher probability of profit. We must remain cautious about the risk of a sudden de-escalation, as hinted by conflicting reports of peace talks. A swift resolution could trigger a sharp sell-off in gold, similar to the 4% pullback we saw in a single week in late 2024 following ceasefire hopes in Ukraine. To protect against this, holding some cheap, out-of-the-money put options could serve as a valuable hedge for long positions. The renewed inflation fears, fueled by surging energy prices, are a significant headwind. Looking at the fed funds futures market, traders have significantly dialed back expectations for a rate cut in the second quarter, with the probability now sitting below 30% from over 70% at the start of the year. This, along with rising Treasury yields, could cap gold’s rally if the conflict’s safe-haven appeal begins to fade. However, the underlying support for gold remains strong due to persistent central bank buying. We’ve seen this play out over the last year, as World Gold Council data showed central banks added another 1,037 tonnes to their reserves in 2025, marking the second-highest year on record. This trend provides a solid floor under the price, suggesting any dips caused by de-escalation may be seen as buying opportunities by these large institutions. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account