The world's two biggest economies are on the brink of an economically destructive trade war. Here's what experts think could happen next.

The U.S. dollar slumped to an eight-week trough to the yen and lingered near a one-month low versus sterling on Thursday, as investor nerves about an inflation-stoking global trade war abated. Japan's currency was also supported by rising expectations for further Bank of Japan interest-rate hikes with a central bank official advocating continued rate hikes,

The dollar fell against almost all major currencies as traders continued to price out the risk of an imminent full blown trade war.