Trump's 90-Day Tariff Pause Shifts Fed Rate Cut Bets, Cryptos Volatile

Traders are adjusting their expectations as the market responds to the recent announcement of a 90-day tariff pause by the Trump administration. This development has significantly influenced traders' sentiments regarding Federal Reserve interest rate policies. The cryptocurrency market, in particular, experienced intense volatility on Monday due to conflicting reports about U.S. tariffs. This uncertainty has led to a sharp increase in traders' bets supporting the Federal Reserve to resume its monetary policy easing cycle, which was paused in January.

The market's reaction to the tariff pause has been mixed, with some sectors experiencing relief while others remain cautious. The impact of the tariff pause extends beyond traditional markets, affecting the cryptocurrency sector as well. In 2025, the U.S. tariff policy caused significant turmoil in the cryptocurrency market, leading to a decline in the prices of Bitcoin and Ethereum. Safe-haven assets, however, saw an increase in demand as traders sought stability amidst the uncertainty.

The European Union's response to the tariff onslaught has been measured, adopting its first measures to hit back at President Trump's tariffs. This move targets more than 20 billion euros of U.S. products, adding another layer of complexity to the global trade dynamics. The EU's actions are part of a broader strategy to mitigate the impact of the tariff hikes, which have reverberated across world markets.

The market's anticipation of increased rate cuts by the Federal Reserve is driven by the need to stabilize the economy in the face of escalating trade tensions. According to analysts' forecasts, the Fed may resume its easing cycle to counteract the negative effects of the tariff war on economic growth. This expectation has led to a recalibration of market sentiments, with traders adjusting their positions in anticipation of the Fed's next move.

The global trade war, sparked by President Trump's tariff hikes, continues to puzzle America's trading partners. Nations are grappling with how to respond to the escalating tensions, which have far-reaching implications for global trade and economic stability. The market's reaction to these developments underscores the need for a coordinated response to mitigate the impact of the tariff war on global markets.