NZD/USD hits fresh 31-month lows, risks breaking below 0.65 handle

   •  Trade-related headlines reignite USD rally and prompted some fresh selling.
   •  Pickup in the US bond yields remains supportive of resurgent USD demand.
   •  Weaker commodity prices do little to lend any support and stall the downfall.

The NZD/USD pair extended its retracement slide from an intraday high level of 0.6541 and refreshed 31-month lows in the last hour.

After an initial uptick to an intraday high level of 0.6541, the pair met with some fresh supply and turned lower for the fifth consecutive session. Resurgent US Dollar demand, triggered by the latest trade-related development, was seen as one of the key factors weighing on the major.

China has asked WTO for authorization to impose trade sanctions on the US, which added fuel to the ongoing trade spat between the world's two largest economies and triggered a fresh wave of global risk-aversion trade.

The risk-off mood was evident for a sea of red across European markets and indications of a steep fall in the US markets, which was eventually seen benefitting the greenback's safe-haven status and driving flows away from perceived riskier currencies - like the Kiwi.

Meanwhile, a goodish pickup in the US Treasury bond yields remained supportive of the prevalent USD bullish sentiment, with a negative tone around commodity space doing little to lend any support and ease the bearish pressure.

Technical levels to watch

The pair has moved on the brink of breaking below the key 0.65 psychological mark, which if broken should pave the way for an extension of the downfall towards 0.6470-65 intermediate support en-route the 0.6440 region. 

On the flip side, any attempted recovery move might continue to confront some fresh supply near the 0.6540 region, above which a bout of short-covering could assist the pair to aim back towards reclaiming the 0.6600 handle.