Markets swing between trade war fears and September Fed cut hopes

Global forex markets experienced heightened volatility as traders balanced concerns over escalating trade tensions against growing expectations for a Federal Reserve rate cut in September. The persistent uncertainty surrounding trade tariffs has created risk-off sentiment, traditionally supporting safe-haven currencies like JPY and CHF. However, firm hopes for Fed monetary easing have simultaneously pressured the US dollar, creating complex cross-currents in major pairs. Market participants are pricing in a high probability of a 25-basis-point cut at the September FOMC meeting, based on recent economic data and Fed communications. The conflicting forces of trade uncertainty and monetary policy expectations have resulted in choppy trading conditions across currency markets. Traders are advised to maintain flexible positioning as these dual themes continue to drive price action, with particular attention to Fed officials' comments and trade negotiation developments.