Global FX markets brace for Fed uncertainty, mixed signals from central banks

Currency markets face heightened volatility as political tensions surrounding the Federal Reserve clash with diverging central bank policies globally. The dollar index hovers near 101.50, caught between safe-haven demand and concerns over Fed independence following reported attempts to remove Governor Cook. EUR/USD trades in a tight 1.0840-1.0860 range as traders await clearer signals from both the Fed and ECB. Asian currencies showed mixed performance, with USD/JPY recovering from 149.30 lows while AUD/USD weakened on dovish RBA minutes. Gold's surge to $2,520 reflects growing uncertainty about monetary policy stability. Market positioning remains cautious, with reduced leverage across major pairs as traders hedge against potential policy surprises. The week ahead features limited economic data, keeping focus on central bank communications and any developments in the Fed leadership situation.