NZD/USD hits fresh 2-1/2 year low, below mid-0.6500s

   •  Escalating US-China trade tensions continue to weigh on the Kiwi.
   •  Resurgent USD demand/US bond yields add to the downward pressure.
   •  Traders now eye US ISM manufacturing PMI for some short-term impetus.

The NZD/USD pair maintained its offered tone for the fourth consecutive session and dropped to fresh 2-1/2 year lows in the last hour.

The pair extended last week's sharp rejection slide from the 0.6720-30 supply zone and kept losing ground through the early European session on Tuesday amid escalating US-China trade tensions. 

This coupled with resurgent US Dollar demand, supported by a goodish pickup in the US Treasury bond yields, aggravated the selling pressure and was seen as one of the key factors behind the latest leg of a sudden drop over the past couple of hours or so.

Currently hovering around mid-0.6500s, the lowest level since February 2016, market participants now look forward to the US economic docket, highlighting the release of ISM manufacturing PMI for some fresh impetus later during the early North-American session.

Technical levels to watch

A follow-through selling pressure has the potential to continue dragging the pair further towards the key 0.6500 psychological mark en-route its next major support near the 0.6430-20 region. On the flip side, any recovery attempt back above 0.6570-75 area might now be capped at the 0.6600 handle, above which a bout of short-covering could lift the pair towards 0.6640 supply zone.