OCBC strategists Sim Moh Siong and Christopher Wong report that the USD/TWD currency pair has been trending lower in recent sessions, driven by strong performance in Taiwan equities, increased foreign inflows, and robust technology exports. These factors have led to the Taiwan Dollar (TWD) re-aligning with the technology cycle, providing fundamental support for the currency [1].
Despite the ongoing bearish momentum, technical analysis reveals that USD/TWD is forming a falling wedge pattern on the daily chart, a formation typically associated with a bullish reversal. Additionally, the Relative Strength Index (RSI) is approaching oversold territory, further indicating the potential for a reversal in the near term. Key support is identified in the 31.40–31.50 range [1].
While TWD remains fundamentally supported by portfolio inflows and strong external trade, the combination of a stretched chart and technical signals suggests that the current downtrend in USD/TWD may be at risk of reversing. The strategists highlight that, although bearish momentum persists, market participants should be alert to the possibility of a bullish reversal from current support levels [1].
CONCLUSION
USD/TWD has been under pressure due to strong Taiwan equity inflows and tech exports, but technical indicators now point to a potential reversal. Market participants should monitor the 31.40–31.50 support zone, as a bullish reversal could emerge if current conditions persist.