NZD/USD extends overnight rejection slide, slips below mid-0.7100s

The NZD/USD pair extended yesterday's rejection slide from the 0.7200 handle and remained under heavy selling pressure through early European session on Wednesday. 

Tuesday's better-than-expected US economic data remained supportive of the ongoing US Dollar up-move and has been one of the key factors weighing on the major. Adding to this, a modest uptick in the US Treasury bond yields was also seen driving flows away from higher-yielding currencies - like the Kiwi.

   •  US Dollar firm around 93.30, data, Fedspeak on sight

In absence of any fresh fundamental trigger, Wednesday's downslide could also be attributed to some long unwinding after the bulls repeatedly failed to lift the pair beyond the 0.7200 handle. 

Meanwhile, the pair's inability to build on its move back above the very important 200-day SMA and reemergence of selling pressure clearly seems to indicate that the near-term downward trajectory might still be far from being over. Hence, a follow through slide, back closer towards last week's 4-month lows, now seems a distinct possibility. 

Later during the NA session, speeches by influential FOMC members, along with the US housing market data would also be looked upon for some short-term trading impetus. The key focus, however, would be on the NZ political developments, wherein the country's First Party is expected to announce decision on government on Thursday. 

   •  New Zealand likely to announce new government by end of week - RTRS

Technical levels to watch

Immediate support is pegged near 0.7125 level, which if broken could drag the pair back towards the 0.7100 handle en-route multi-month lows support near mid-0.7000s.

On the upside, .7170-75 zone now seems to act as immediate hurdle, above which the pair is likely to make a fresh attempt towards conquering the 0.7200 handle before darting towards 50-day SMA near the 0.7225 region.