US CPI Takes Center Stage as Markets Brace for Higher VolatilityUS Dollar IndexCAPITALCOM:DXYew-forecastMorning traders! The market remains relatively slow, but volatility could pick up today as US CPI inflation data takes center stage. Oil extended its rally as the US and Iran appeared to harden their positions over negotiations involving the Strait of Hormuz, despite Pakistan's defense minister saying the two sides are close to reaching an agreement. Higher oil prices are keeping investors cautious as markets weigh geopolitical risks against uncertainty over the Federal Reserve's next rate move. US CPI is expected at 3.4%, down from 3.5%. A reading at or below expectations could support risk-on assets and put further pressure on the US Dollar, while a hotter-than-expected print could trigger a deeper corrective pullback in stocks and a larger USD recovery. All eyes are on CPI today. This also explains why the US Dollar Index (DXY) is recovering. Considering that Treasuries could see further weakness, DXY may face a larger wave “c” recovery of an abc irregular flat correction in wave “iv”, potentially revisiting the 99.80–100.00 resistance area before the bears regain control in wave “v”. However, if the recovery remains slow and sideways on an intraday basis ahead of the US CPI inflation data, DXY could instead be forming a bearish running triangle within wave “iv.” Traders should also be prepared for volatility and potential spikes in both directions around the CPI release.