Ahead of the new year and amid a slow news week, it’s an opportune time to review what many analysts are expecting to affect forex markets over the next several months. 2026 will bring new challenges and opportunities for traders. A review of some of the more common expectations might help to tweak trading strategies and monitor trends that could drive currencies in the new year.

Some themes are expected to be continuations of what we’ve been seeing in the markets over the last few months. That includes the Fed’s shift towards easing, evolving AI dynamics, and fiscal stimulus in Europe and Asia. But there are likely to be new trends as well. Many analysts believe that market attention will shift amid dollar weakness and rising commodity prices toward emerging markets. As central banks lower rates, investors will seek better returns and yields.
 

Low Volatility and Prices

Compared with the large swings in the markets seen last year, analysts expect less volatility in 2026. That is assuming there are no significant surprises, of course. The main driver of volatility in 2025 was the trade war, which has since eased as most countries reached agreements that have led to a new global trade regime. Even if the US Supreme Court issues a ruling that upsets the White House’s trade policies, other measures can be implemented, and the overall trade dynamic will remain.

This generally calmer market would likely encourage carry trades, but given the compression in interest rate gaps over the last year, some non-traditional pairs might appear. Traditionally, the yen’s low interest rates have made it a favorite base for carry trades, and now that the BOJ has hiked, it might be a long time before rates are tightened in Japan again. Meanwhile, other central banks are moving toward a hawkish stance, including the ECB, which could create new trading opportunities.
 

Stimulus Spending and Economic Divergence

Speaking of the ECB, analysts note that Germany is increasing its spending next year after lifting its “debt brake.” This is expected to help boost the world’s largest economy, which would also increase inflationary pressure on the Euro. Overall, it would likely increase demand for the shared currency, leading to its appreciation against its peers. The EURUSD could be particularly mobile as the Fed eases while the ECB tightens.

With inflation still high in many countries, including the UK and the US, and above target in Europe, demand for assets that store value is likely to remain strong. This is particularly beneficial for gold, of course, but other precious metals may stand out amid a resurgence in commodity demand.
 

Commodities Might Shine in 2026

Silver has been in the spotlight this year, hitting record after record. The metal has the safe-haven appeal of gold but is also a key component in the energy transition, used to build solar panels. Industrial demand has helped propel silver higher, and might do the same for other commodities, such as copper.

China’s stimulus spending is expected to continue amid efforts to meet its growth targets. This could help emerging currencies, as well as established commodity currencies such as the Australian dollar. Meanwhile, geopolitical pressures will likely lead China to continue buying gold, helping to elevate the precious metals complex.

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