Bias: bullish-to-range-bound, as USD/TWD sits above the 90-day average and in the upper half of the three-month range.
Key drivers:
• Rate gap: The Fed is expected to ease later in 2026 while Taiwan keeps a cautious stance, widening the USD-TWD gap and supporting the dollar.
• China macro: China's inflation path and growth outlook will shape regional demand and risk appetite.
• Taiwan policy: Taiwan's central bank has shown restraint, while regulatory changes around TWD hedging raise flows and hedging activity.
Range: The pair is expected to drift within its three-month range, currently near the upper end, with a possible test of the upper end if USD remains firm.
What could change it:
• Upside risk: stronger US payrolls data or a hawkish Fed tilt could lift USD against TWD.
• Downside risk: quicker US rate cuts or improving risk appetite could weigh on USD and support TWD.