EUR/TWD Outlook:
The EUR/TWD is currently near its recent average and trading at 30-day lows, suggesting a sideways outlook. There are limited directional influences, despite some positive signals in the Eurozone.
Key drivers:
- Rate gap: The European Central Bank is expected to maintain a more accommodative monetary policy compared to Taiwan's central bank, which has held its policy rate steady, providing some support for the EUR.
- Risk/commodities: With oil prices trading significantly above their recent average, the resultant inflationary pressures may influence the euro's strength, since higher energy costs generally affect economic performance in the Eurozone.
- One macro factor: Improvement in German business morale is a positive indicator for the euro, enhancing its appeal against the TWD.
Range:
The EUR/TWD is likely to move sideways as it remains within a stable 3.9% range, indicating limited volatility in the near term.
What could change it:
- Upside risk: A strengthening of the euro could occur if inflation rates continue to rise in the Eurozone, prompting a shift in ECB policy.
- Downside risk: Further developments regarding US tariffs that may impact the EU's trade framework could negatively affect the euro's value.
