NZD/USD falls to 3-1/2 month lows, around mid-0.6600s

• A modest pickup in the USD demand prompts some fresh selling on Tuesday.
• A slight deterioration in risk sentiment further drives flow away from the Kiwi.
• Traders now eye second-tier US economic data for some short-term impetus.

The NZD/USD pair remained under some selling pressure through the mid-European session and is currently placed at over 3-1/2 month lows, around the 0.6660-55 region.

The pair met with some fresh supply on Tuesday and finally broke down of its two-day-old consolidative trading range to extend its recent/well-established bearish trend witnessed over the past one month or so.

A modest pickup in the US Dollar demand amid relatively thin liquidity conditions after the long Easter weekend holiday was seen as one of the key factors exerting some fresh downward pressure on the major.

Bearish traders further took cues from a slight deterioration in risk sentiment, which benefits the greenback's relative safe-haven status and tends to drive flows away from perceived riskier currencies - including the Kiwi.

Meanwhile, the prevalent bullish sentiment around commodity space did little to lend any support to the commodity-linked currency or stall the ongoing bearish slide to the lower level since early January.

Moving ahead, today's second-tier US economic releases - new home sales data and Richmond Manufacturing Index, will now be looked upon for some short-term trading impetus during the early North-American session.

Technical levels to watch

A follow-through selling below mid-0.6600s has the potential to accelerate the fall further towards 0.6630 intermediate support before the pair eventually drops to challenge the 0.6600 round figure mark. On the flip side, the 0.6680 horizontal level, above which a bout of short-covering could lift the pair beyond the 0.6700 round figure mark towards testing the 0.6715-20 supply zone.

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