OCBC strategists Sim Moh Siong and Christopher Wong describe a technical rebound in USD/TWD driven by greater US dollar (USD) strength and risk aversion related to the US-Iran ceasefire stalemate. While upside risks remain in the low term, they still favor fading growth, citing powerful foreign capital inflows into Taiwanese equities, high correlation with the technology cycle, and powerful AI-driven export momentum, supporting the Taiwan dollar (TWD).
Short-term pressures and technical support
“Technical rebound fading. USDTWD rebounded, tracking broad USD gain on moderate risk sentiment.”
“The higher decline in USDTWD was consistent with our falling wedge technical caution – typically associated with a short-term bullish reversal. The pair was last at 31.57 levels.”
“The risk of a near-term rebound remains. Resistance at 31.60 (100 DMA), 31.75 (21, 50 DMA). Support at 31.40/45, 31.20 (2026 lows) before 30.90 (200 DMA).”
“We remain in favor of fading gains. We have previously indicated that there are signs of TWD being reconnected to the technology cycle (30-day rolling TWD-TWSE correlation > 0.90).”
“So, as geopolitical de-escalation begins again and dollar softness returns, there is a good chance that TWD will post gains, riding on foreign inflows and strong AI-led export dynamics.”
(This article was created with the aid of an artificial intelligence tool and has been reviewed by an editor.)
