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Tariffs continue to dominate the market, as yesterday Trump announced new tariffs on some Canadian imports. As expected, Canada responded, stating they will impose a 25 percent charge on electricity exported to the US. Due to these ongoing trade wars, we continue to see risk-off flows, though there is some optimism around a potential ceasefire between Ukraine and Russia. Trump also announced he is ready to meet with President Zelensky again, which could trigger a near-term rally in stocks.

Crude Oil vs. US CPI Inflation y/y

However, the main market focus today will be the US CPI report, set for release at 1:30 p.m. Central European Time. I expect lower inflation readings, as energy prices have fallen significantly since mid-January. But if inflation surprises to the upside, with readings near or above 3 percent, it would be bearish for stocks and trigger a US dollar recovery. Any dollar strength, however, would likely be temporary and corrective.

DXY 4H Chart

When looking at the Elliott wave structure on the dollar index, we should not be surprised by a three-wave retracement as five waves down in blue wave three can be in late stages. Resistance levels are around 104.30 and then 105.00.

For a detailed view and more analysis like this, you may want to watch our latest recording of a live webinar streamed on March 10, 2025. Link here.

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