USD/TWD Outlook: Slightly positive, but likely to move sideways as the exchange rate is above its recent average and lacks a clear driver to push higher consistently.
Key drivers:
- Rate gap: The Federal Reserve has paused rate cuts, supporting the US dollar, while the Central Bank of Taiwan maintains its policies, leading to a favorable outlook for USD.
- Risk/commodities: Commodity market volatility is prompting investors to seek the dollar as a safe haven, which helps support its value against the TWD.
- Trade agreement: Taiwan's recent trade agreement with the US could enhance economic relations, which may provide mixed signals for the TWD's strength as it increases capital flows and potential dollar demand.
Range: Expect the USD/TWD to hold within its recent range, possibly drifting near current levels.
What could change it:
- Upside risk: A stronger-than-expected US jobs report could boost demand for the USD.
- Downside risk: If geopolitical tensions escalate and lead to broader market uncertainties, it could lower demand for the USD.
