NZD/USD sinks below 0.7200 handle

Extending Tuesday's reversal from 0.7310 level and a subsequent drop below 50-day SMA support, the NZD/USD pair broke through 0.7200 handle to the lowest level since mid-August.

Currently trading around 0.7180 region, the pair came under intense selling pressure on Tuesday after GDT price index fell 3% following a rise of 1.7% at the previous auction, marking its first decline since July. The pair maintained its overnight offered tone and dropped further below 0.7200 handle amid mixed US Dollar performance. 

Meanwhile, comments from RBNZ Assistant Governor John McDermott that the central bank has a clear inflation objective reinforced market expectations of further easing by RBNZ and failed to provide any immediate respite for the bulls.

Focus now turns to today's US macro releases that include - ADP report on private sector employment, trade balance data, ISM non-manufacturing PMI and factory orders, which would be looked upon for immediate trading opportunities ahead of the keenly watched monthly jobs report on Friday.

Technical levels to watch

Immediate downside support is pegged at 0.7165 (August 15 low) below which the pair is likely to aim towards testing 100-day SMA support near 0.7140 region. On the upside, 0.7200 handle now becomes immediate resistance, which if cleared should help the pair to stage additional recovery. However, any further recovery beyond 0.7200 handle might now be capped at 50-day SMA support break, now turned resistance near 0.7250-55 region.