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NZD/USD flirting with weekly lows, around mid-0.6800s ahead of US CPI

   •  The pair’s inability to sustain above 0.6900 handle prompts some long-unwinding.
   •  Rebounding US bond yields underpin USD demand and add to the retracement slide.
   •  Traders look forward to the latest US consumer inflation figures for some fresh impetus.

The NZD/USD pair extended its sharp intraday retracement slide and has now dropped to the lower end of this week's trading range, around the 0.6845 region.

Despite the latest optimism over improving US-China trade relation, the pair, for the fourth straight session, struggled to sustain/build on the momentum further beyond the 0.6900 handle and today's downfall appeared to be driven by technical-related rather than fundamental. 

Against the backdrop, the prevalent bullish sentiment surrounding the US Dollar, further supported by rebounding US Treasury bond yields, seemed to be one of the key factors prompting some long-unwinding trade since the Asian session on Wednesday.

The downside, so far, appeared limited amid the prevalent positive mood around commodity space, which tends to underpin demand for commodity-linked currencies - like the Kiwi.

Meanwhile, traders might also be reluctant to place aggressive bets ahead of today's important US macro data - the latest consumer inflation figures for November, due for release during the early North-American session.

Hence, it would be prudent to wait for a strong follow-through selling before confirming that the pair might have already topped out, and positioning for any further near-term depreciating move.

Technical levels to watch

Any follow-through selling pressure might now turn the pair vulnerable to accelerate the fall further towards testing sub-0.6800 level. On the flip side, the 0.6870 level now becomes immediate resistance and is closely followed by the 0.6900 round figure mark, above which the pair is likely to aim towards challenging multi-month tops, around the 0.6970 region.

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