AED/TWD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average and lacks a clear driver for further gains.
Key drivers:
• Rate gap: The Central Bank of the UAE maintains a stable outlook for the AED, while Taiwan's central bank is acting cautiously on interest rates, creating a mixed impact on the currencies.
• Risk/commodities: Oil prices remain above average, supporting the AED due to the UAE's significant oil revenues, while Taiwan's exposure to global trade dynamics affects the TWD.
• One macro factor: The recent U.S.-Taiwan trade agreement may boost TWD strength, affecting trade balances and investor confidence in the region.
Range: The AED/TWD is likely to test the recent extremes within its stable 3-month range, given current conditions.
What could change it:
• Upside risk: A significant increase in oil prices could further support the AED's strength.
• Downside risk: Any signs of economic slowdown in Taiwan could weaken the TWD and impact the exchange rate negatively.