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The US economy is rebounding from a deep contraction, but the resurgence of COVID-19 poses downside risks, particularly if it overwhelms hospitals in certain areas, according to Dallas Federal Reserve Bank President Robert Kaplan. 

“Right now, the trends are in the wrong direction,” Kaplan said in a virtual event for the Louisiana communities of Shreveport and Bossier City.

Cases of the novel coronavirus have surged across the United States, prompting authorities to renew restrictions on economic activity in some cities, including El Paso, Texas, as well as whole states such as Utah.

DXY technical analysis

The DXY could be on the verge of the next bearish impulse:

As per Monday’s analysis, the recent correction was forecasted as follows:

The correction has reached the target in a rapid move, which was not expected:

However, the market remains bearish with price below the 4-hour 21 moving average and MACD below zero. 

A deeper retracement may still be on the cards because there is a lot of bad news that was priced into the US dollar, but the vaccine headline is not enough, as Kaplan warns, to prevent the current wave of the virus.