2026 Market Outlook
Volatility unleashed, opportunity abound
* Trading is risky. Your capital is at risk.
As another busy year in the financial markets comes to an end our Senior Market Analyst Lukman Otunuga talks a look at the major stories from 2025.
This review covers the major themes, key movers, the year’s biggest shocks, our forecast scorecard, and the lessons worth taking into 2026.
All performance figures referenced are year-to-date as of 16th December 2025 unless otherwise stated.
Key takeaways
Success in the forex market means understanding the fundamentals, picking the right broker and platform, and building a strong trading plan.
Managing risks is key in forex trading. Using stop loss and take profit orders is vital to safeguard investments.
Managing risks is key in forex trading. Using stop loss and take profit orders is vital to safeguard investments.
Managing risks is key in forex trading. Using stop loss and take profit orders is vital to safeguard investments.
What are the major market themes for 2026?
A mashup of major themes will shape global markets in 2026.
Big tech’s trillion-dollar bet, monetary policy shifts, geopolitical risk and Trump’s unpredictability all have one thing in common: extreme volatility.
And this could present tremendous opportunities for traders and investors.
Here are four key assets that may see massive price swings.
Assets to watch in 2026
1. US500 set for another double-digit year?
The US500 wrapped up 2025 over 16% higher, its third year of double-digit gains.
But can this momentum be maintained in 2026?
It’s worth noting the last time US500 saw four consecutive years of double-digit gains was in the late 1990s tech bull market.
S&P 500 Annualised Returns 1986-2025
Here are three key factors that could keep the bull party alive:
AI lives up to hype
The AI hype will likely keep fuelling tech investment, further elevating stock valuations as investor expectations reach new heights.
This, along with solid corporate earnings from Nvidia and other tech titans could translate to greater gains, propelling the US500 to fresh record highs.
Trump-aligned Fed head
US President Donald Trump has stated that he wants a Fed chair who will support substantially lower interest rates.
Keven Hasset, a widely considered dove, is seen as the frontrunner to be the next US Fed chair. To be clear, Trump’s pick is not enough to threaten the Fed’s independence, but the idea of a dovish chair may fuel bets around more cuts in 2026.
Fed base rate predictions in 2026
US midterm elections
Looking at past data, US equities have risen regardless of the election results, although there may be some volatility in the aftermath of the vote.
This could be due to the fog of political uncertainty lifting after the outcome, allowing traders to focus on fundamentals.
On the flip side...
Delayed tariff pain
Economic growth was surprisingly resilient in 2025 despite Trump’s trade war.
But as businesses start passing the extra costs of tariffs onto their consumers and profits drop, this could hit economic growth.
AI fails to deliver
The AI hype could turn into panic if the massive spending fails to justify the lofty profit expectations, especially if tech companies struggle to monetise AI.
Technical outlook
Analysts are forecasting the index to hit 7965.53 in the next 12 months, representing a 15%+ increase from current prices.
Analyst predictions for the S&P 500 in 2026
- A strong close above 7000 could open a path toward 7500 and 7900.
- Weakness below 7000 could trigger a decline back toward 6600, 6350 and the 50-week SMA at 6200.
2. USDJPY primed for 10%+ selloff?
Last year, the yen was the worst-performing G10 currency against the USD.
But things may flip in 2026 due to the monetary policy divergence between the BoJ and Fed.
Here’s a snapshot of major factors for traders to monitor:
BoJ rate hike on the cards
Japan’s central bank is set to tighten modestly in 2026 thanks to strengthening growth and inflation. The BoJ is projected to hike rates at least twice, which may strengthen the yen.
Fed on easing cycle
On the other side of the Atlantic, the Fed is expected to slash rates at least two times in the new year to support economic growth amid trade-related and political risk.
Risk aversion
Renewed trade fears and geopolitics could spark risk aversion across the board, sending investors towards the yen’s safe embrace.
On the flip side...
BoJ obstructed by fiscal doves
Japan’s newly elected Prime Minister, Sanae Takaichi, is expected to pursue dovish fiscal and monetary policies. If this impacts the BoJ’s ability to hike rates, the yen could weaken.
Carry trade fears
The BoJ may be forced to adopt a cautious stance on rate hikes amid fears of carry trade unwind resulting in market turbulence and falling global stocks.
Technical outlook
According to the BBG FX model, there is a 74% that the USDJPY trades between According to the BBG FX model, there is a 74% that the USDJPY trades between 137.38 – 167.26 over the next year.
3. Gold to conquer $5,000 milestone?
Gold glittered throughout 2025, ending the year almost 65% higher.
The precious metal only had one negative month as bulls drew strength from central bank buying, ETF inflows, geopolitics and Fed cut bets.
Gold could still reach new heights. Here‘s why:
Fed cuts & dollar weakness
Fundamentals remain broadly in favour of higher Gold prices as the Fed cut rates in the face of slowing growth, with a weaker dollar offering further support.
Central bank buying
Global Gold demand hit an all-time high in the third quarter of 2025, with central banks remaining a key pillar of the purchases. As central banks hedge against risk and diversity, the bullion buying spree could roll over into the new year.
Geopolitical risk
Ongoing Russia-Ukraine conflict, persistent tensions in the Middle East and South China Sea may spark bursts of risk aversion. Although trade tensions have moderated, political fragmentation may weigh on investor confidence.
On the flipside...
Less dovish Fed in 2026
Gold may fail to push higher if a less dovish than expected Fed lends support to the dollar.
Improving global mood
Easing geopolitical tensions, improving global trade relations and a risk-on sentiment powered by the AI hype may hit appetite for Gold.
Technical outlook
According to the BBG FX model, there is a 74% chance that XAUUSD trades between $3,628 – $5,520 over the next year.
4. Bitcoin down but not out
2025 was rough for cryptocurrencies with bitcoin posting its first negative year since 2022. After the flash crash in October, prices failed to recover with ETF outflows and overall caution fuelling downside losses.
Despite the negative price action, bulls could return in 2026. Here’s why:
Macroeconomic forces
Signs of cooling inflation and slowing growth may fuel bets around lower interest rates.
Historically, bitcoin tends to rise when interest rates fall as the opportunity cost of holding non-yielding assets declines.
Thinning supply
Given how a significant amount of bitcoin is locked in long-term wallets and ETFs, this has created a thin active supply which could be a bullish driver. As of December, approximately 19.96 million bitcoins have been mined, representing over 95% of the total possible maximum supply of 21 million bitcoins.
On the flip side...
Tax laws
Starting from 2026, new tax reporting rules will be implemented in the US, UK and EU requiring exchanges to report user sales. This increased scrutiny could affect investor behaviour and privacy in the near term.
MicroStrategy
As of December, MicroStrategy held a total of 672,497 bitcoins worth around $61 billion and raised $2 billion in USD reserves as a backstop to prevent forced sales of its bitcoin holdings.
The pending MSCI ruling in January 2026, which decides whether crypto-heavy firms get to stay in major indices, may indirectly impact bitcoin. A sharp decline in MSTR stock following an MSCI exclusion would likely pressure the bitcoin price as well, as MSTR is a major public proxy for the cryptocurrency.
Technical outlook
- Sustained weakness below the psychological $100,000 level may open a path toward $77,500, $54,000 and $40,000.
- Should prices push back above $100,000, bulls may target the all-time high and beyond.
The bottom line
With all the above said, 2026 could be another year defined by extreme volatility.
A rich cocktail of themes ranging from big tech’s big bet, geopolitics, and ongoing trade tensions among other forces, could leave markets buzzing with activity.
And this could only mean one thing: plenty of trading opportunities regardless of the direction.
Major indices, commodities, metals and even cryptos could be in for a wild ride.
Make sure to follow our regular market updates and analysis, so you stay in the know as the year progresses.