OCBC strategists Sim Moh Siong and Christopher Wong describe a technical rebound in USD/TWD driven by broader US Dollar (USD) strength and risk aversion linked to the US‑Iran ceasefire stalemate. While near-term upside risks persist, they still prefer fading rallies, citing strong foreign inflows into Taiwanese equities, high correlation with the tech cycle, and robust AI-led export momentum as supportive for the Taiwan Dollar (TWD).

Short-term squeeze versus tech support

"Technical rebound fade. USDTWD rebounded, tracking the broad uptick in USD as risk sentiment was restraint."

"The squeeze higher in USDTWD was consistent with our technical caution for falling wedge – typically associated with a near term bullish reversal. Pair was last at 31.57 levels."

"Near term rebound risks remain. Resistance at 31.60 (100 DMA), 31.75 levels (21, 50 DMAs). Support at 31.40/45, 31.20 (2026 low) before 30.90 (200 DMA)."

"We still favour fading rallies. Earlier we had indicated that there are signs that TWD is recoupling with tech cycle again (TWD-TWSE 30-day rolling correlation >0.90)."

"So, when geopolitical de-escalation gets underway again and USD softness returns, then there is a good chance TWD can see gains catch up, riding on foreign inflows and strong AI-led export momentum."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)