Despite growing expectations that the US Federal Reserve may cut interest rates by the end of 2025, the US dollar is showing surprising resilience, according to Razan Hilal, market analyst at Forex.

Speaking to Khaleej Times, Hilal highlighted that the dollar's recent rebound is likely supported by long-term technical factors and market sentiment already pricing in the anticipated rate cuts.

“The US Dollar Index has found support at the 96 mark, which coincides with a critical 17-year support level on the long-term chart,” Hilal explained.“This alignment is helping the dollar maintain its strength, even as headlines suggest a weakening outlook.”

However, Hilal cautioned that a drop below the 95 level could trigger a significant shift, potentially setting the stage for a rally in global currencies such as the euro and the pound, reminiscent of their peaks in 2021. For now, she noted, the dollar's stability is benefiting economies like the UAE, whose currency is pegged to the greenback.

Hilal also pointed to increasing positive correlations between UAE markets and US indices, particularly the MSCI UAE index and major US sectors.“We're seeing record highs in US industries, and that momentum is spilling over into the GCC region,” she said. However, she warned that any turbulence in US markets could impact the GCC's economic trajectory, possibly leading to a pullback in 2026 before momentum resumes.

Looking ahead to the US presidential cycle, Hilal noted that the second year of a president's term has historically been bearish for markets.“With trade tensions and geopolitical risks looming, we could see a pullback in the S&P 500 after the current rally, especially heading into the holiday season,” she said.

In terms of sectoral trends, Hilal emphasized the continued strength of technology and renewable energy, alongside traditional safe havens like gold and silver. She flagged key resistance levels at $4,000 for gold and $50 for silver, suggesting investors should wait for a confirmed breakout before increasing exposure.

On cryptocurrencies, Hilal observed growing government integration and regulation, particularly in the UAE, which is attracting foreign capital and fostering a healthy crypto environment.“As Bitcoin breaks above the $125,000 level, it could surge toward $130,000, $150,000, and even $200,000,” she said.

Despite the ongoing US government shutdown, Hilal said markets remain resilient, with risk assets and indices continuing to rally. She encouraged investors to look beyond US assets, citing rising tariff uncertainties and the emergence of independent supply chains in economies like India and China.

“India, for instance, faced a 50 per cent tariff risk from the US over Russian oil imports but chose to proceed, confident in its domestic growth strategy,” Hilal noted.“We may see similar developments in 2026 as more economies seek independence from US trade barriers.”

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