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Investors are heading into 2026 with fading momentum across major global markets as record valuations, shifting fiscal signals and geopolitical uncertainty weigh on sentiment, according to FOREX.com’s recently published 2025/26 Market Outlook.
“Major indices have tested multi-decade highs, but momentum appears to be fading,” said Razan Hilal, CMT, market analyst at FOREX.com. “We are seeing the early stages of a retracement phase across key benchmarks, suggesting that 2026 will be defined by recalibration rather than expansion.”
US small-cap equities, tracked by the Russell 2000, are once again pushing up against the 2,500 resistance zone, a level last seen before the tariff-driven sell-off in 2025.
Larger benchmarks show similar exhaustion: the Dow Jones Industrial Average has stalled below 48,000, the Nasdaq remains capped under 26,300, and the MSCI US Index continues to struggle to break 20.50.
“While the AI and tech sectors have driven exceptional gains, valuations north of $4tn for mega-cap leaders like Microsoft and Nvidia have pushed sentiment to stretched levels,” Hilal said. “A measured correction could restore balance to what has become an overheated market.”
Gold, silver and oil prices
Safe-haven metals rallied sharply in 2025, with gold hitting an inflation-adjusted record above $4,300 an ounce and silver rising to $54.30, their strongest levels in dollar terms since 1980. Both are now consolidating after steep gains. FOREX.com expects potential pullbacks toward $3,500 for gold and $42 for silver before the next cyclical advance. “Momentum fatigue in safe havens mirrors what we’re observing across risk assets,” Hilal added. “The underlying structural bid for inflation protection remains intact, but investors should expect a normalisation in volatility.”
The US dollar index has slipped to a 17-year trendline near 96 under pressure from weaker labour data and dovish policy expectations, though FOREX.com sees this as a possible long-term support zone. The level could help sustain relative dollar strength and maintain stability for pegged currencies including the UAE dirham.
Oil prices remain supported by a structural floor near $55 a barrel, a level aligned with a trendline dating back to the 1860s. Still, OPEC’s slow unwinding of supply cuts and uneven global demand may leave crude vulnerable to declines toward $49 before finding a base.
Outlook for UAE remains positive
Despite the more cautious global backdrop, the UAE continues to strengthen its position as an investment and innovation hub, supported by crypto-friendly regulation, rising healthcare-tech activity and long-term infrastructure projects.
These trends coincide with the broader recovery in industrial demand and renewed digital asset adoption amid a US–China trade truce.
“The UAE’s progressive stance on digital finance and sustainable growth is attracting young capital inflows,” Hilal said. “As global trade frameworks stabilise, we expect emerging economies to gain momentum in 2026, particularly across energy, logistics, and technology.”
FOREX.com said 2026 is likely to be shaped by legacy fiscal policy, recalibrated liquidity cycles and changing energy-market dynamics. “Markets are transitioning from reaction to reflection,” Hilal said. “2026 will be about endurance, not euphoria, as investors adjust to the long arc of second-term economics.”
