# Daily Market Brief: What to Expect Today
**January 4, 2026**
Welcome to your daily market brief. As we step into the new year, investors are cautiously optimistic, with many analysts predicting a continuation of the market rally we witnessed in 2025. However, a number of underlying risks and a mixed outlook for currency markets suggest that 2026 could be a year of careful navigation. Today, we will delve into the outlook for the stock and forex markets to help you prepare for the trading day ahead.
## Stock Market Outlook
Wall Street is entering 2026 with a generally bullish sentiment. Several major investment banks have released optimistic forecasts for the S&P 500, with some targets reaching as high as 7,800. This positive outlook is underpinned by a number of key drivers, including expectations of robust earnings growth, supportive monetary policy from the Federal Reserve, and the potential for increased productivity driven by advancements in artificial intelligence. [1]
However, it is important to approach these forecasts with a degree of caution. The market is currently priced for perfection, with valuations at elevated levels. This means that any disappointment in earnings or unexpected macroeconomic shocks could lead to a significant market correction. It is also worth noting that the S&P 500 is on track to miss out on the traditional “Santa Claus rally” for the third consecutive year, an unprecedented event that may signal underlying weakness in the market. [2]
| Investment Bank | S&P 500 Target for 2026 |
| —————– | ———————– |
| Goldman Sachs | 7,500-7,600 |
| JPMorgan Chase | 7,500 |
| Bank of America | 7,100 |
| Morgan Stanley | 7,800 |
## Forex Market Outlook
The outlook for the forex market is more nuanced. The US dollar is facing significant pressure, with its 18-year trendline at risk of breaking. This is due to a combination of factors, including concerns about overvaluation, high levels of leverage in the financial system, and ongoing geopolitical tensions. The Federal Reserve’s expected interest rate cuts are also likely to weigh on the dollar. [3]
In contrast, the Euro and the British Pound are expected to perform well in 2026. The Euro is currently coiled just below a pivotal resistance level, and a breakout could see it rally to multi-year highs. The Pound is also trading at a strong level, with some analysts forecasting a move towards 1.40 against the dollar by the middle of the year. [4]
| Currency Pair | Forecast |
| ————- | ——————————————– |
| EUR/USD | Constructive outlook, potential for a rally to 1.20-1.24 |
| GBP/USD | Trading near 1.35, with a mid-year target of 1.40 |
| USD/CAD | Growing indecision |
| USD/MXN | Strong bearish trend |
| GBP/EUR | Forecast to be around €1.11 by the end of 2026 |
## Today’s Trading
For today’s trading, we can expect a relatively quiet start to the day, with the technology sector likely to be a key driver of market movements. Investors will be closely watching for any economic data releases that could provide further clues about the health of the global economy. In the forex market, the US dollar is likely to remain under pressure, while the Euro and Pound could see further gains.
As always, it is important to have a clear trading plan and to manage your risk effectively. The markets can be unpredictable, and it is essential to be prepared for all eventualities.
### References
[1] Real Investment Advice. (2026, January 3). *Market Outlook For 2026*. Retrieved from https://realinvestmentadvice.com/resources/blog/market-outlook-for-2026/
[2] MarketWatch. (2026, January 3). *Investors pin hopes on the ‘January barometer,’ with stocks set to skip Santa Claus rally for a 3rd year*. Retrieved from https://www.marketwatch.com/story/investors-pin-hopes-on-the-january-barometer-with-stocks-set-to-skip-santa-claus-rally-for-a-3rd-year-343e0e77
[3] AInvest. (2026, January 3). *The 2026 Financial Earthquake: Is the Dollar’s 18-Year Trendline About to Snap?*. Retrieved from https://www.ainvest.com/news/2026-financial-earthquake-dollar-18-year-trendline-snap-2601/
[4] Forex.com. (2026, January 3). *Euro 2026 Outlook: EUR/USD Bulls Look to Reset Multi-Year Rally as Monetary Policy Diverges*. Retrieved from https://www.forex.com/en-us/news-and-analysis/euro-2026-outlook-eur-usd-bulls-look-to-reset-multi-year-rally-as-monetary-policy-diverges-technical-1-3-2025/
