NZD/USD slides to 2-1/2 week lows, around mid-0.6500s ahead of US data

   “¢   Kept losing ground for the second straight session amid a modest USD uptick.
   “¢   Hawkish comments by Evans/pickup in the US bond yields revive USD demand.
   “¢   Technical selling adds to the selling pressure ahead of the US economic data.

The NZD/USD pair remained heavily offered through the mid-European session and tumbled to 2-1/2 week lows, around mid-0.6500s in the last hour.

The pair extended last week’s rejection slide from the 0.6700 neighborhood and kept losing ground for the second consecutive session on Wednesday, with a modest US Dollar uptick exerting some additional downward pressure.  

Against the backdrop of a goodish pickup in the US Treasury bond yields, hawkish comments by Chicago Fed President Charles Evans helped the greenback to recover early lost ground led by the easing concerns over Italy’s budget proposals.  

Speaking to Bloomberg TV, Evans said that he was comfortable with the idea of a December rate hike as the US economic fundamentals remain very strong and inflation data has improved significantly.  

Adding to this, possibilities of some fresh technical selling below a short-term descending trend-line support, extending through lows touched on Sept. 25, 28 and Oct. 2, could also be one of the factors behind the latest leg of downtick over the past hour or so.  

Investors now look forward to the US economic docket, highlighting the release of ADP report on private sector employment and the ISM non-manufacturing PMI for some fresh impetus.

Technical levels to watch

Immediate support is pegged near the 0.6535-30 region, below which the pair is likely to accelerate the fall towards challenging the key 0.6500 psychological mark. On the flip side, any recovery attempt might now confront fresh supply near the 0.6575-80 region and seems more likely to remain capped at the 0.6600 handle.