The Italian-German 10-year bond yield spread, also known as Italy’s risk premium, rose by seven basis points to 1.34 basis points, according to a data. Meanwhile, Spain’s risk premium increased by over four basis points, and France’s rose by 1.5 basis points. The risk premiums increased as investors rotated money into the safe-haven German bonds on fears of a deeper corona-virus-induced economic recession.

That trend may continue as many Eurozone countries are reimposing lockdown restrictions. “Several Spanish regions toughened their corona virus restrictions on Monday, seeking to curb the second wave of contagion that looks set to drive the country with Western Europe’s highest caseload above one million infections this week,” the Singapore-based news agency noted. Inflation has already dropped into negative territory. As such, markets expect the European Central Bank to deliver additional stimulus before the end of the year.

According to the latest corona virus statistics released by Germany’s Robert Koch Institute (RKI), the European powerhouse reported 6,868 new infections on Tuesday.

The total tally stands now stands at 373,167. The death rose sharply by 47, bringing up the total count to 9,836. The daily death count has reached the highest since late May.

Despite the worrying German stats, the optimism over the COVID-19 vaccine continues to play out, with the latest update from Moderna Inc.

The US pharma giant’s CEO said Tuesday, the COVID-19 vaccine interim results will be out in November following which the federal government could authorize emergency use of the company’s experimental vaccine in December, as cited by the Wall Street Journal (WSJ).

EUR/USD 4 Hour Chart:

Support: 1.1716 (S1), 1.1664 (S2), 1.1626 (S3).

Resistance: 1.1807 (R1), 1.1845 (R2), 1.1898 (R3).

The fear of covid-19 makes the investors move towards the German bond, we expect a short term bullish trend for EUR/USD.