USD/TWD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average yet lacks a clear driving force.
Key drivers:
• The Federal Reserve has paused its rate cuts, creating a more stable environment for the US dollar compared to the New Taiwan dollar amid ongoing geopolitical tensions.
• Recent trends in oil prices have influenced global risk appetite, indirectly impacting the USD's strength against the TWD.
• The signing of a trade agreement between Taiwan and the US may support the TWD, but overall demand for USD remains elevated due to local financial adjustments.
Range: The USD/TWD is likely to hold within its current range as it trades near recent highs, with little momentum expected to push it towards the extremes.
What could change it:
• Upside risk: Increased US manufacturing activity could enhance USD's position against the TWD.
• Downside risk: A significant escalation in geopolitical tensions might lead to a flight to safer assets, potentially weakening the USD.