EUR/TWD Outlook:
Slightly positive, but likely to move sideways as the rate stands above its recent average, yet lacks a clear driver for movement.
Key drivers:
• Rate gap: The European Central Bank has maintained rates steady while Taiwan’s Central Bank allows the TWD to strengthen naturally, creating diverging monetary policies.
• Risk/commodities: Recent rises in oil prices, now at multi-week highs, can influence inflation and economic conditions in both the Eurozone and Taiwan, thereby impacting the EUR/TWD.
• One macro factor: Renewed optimism from U.S.-China trade discussions has led to increased confidence and capital inflows into Taiwan, consequently supporting the TWD.
Range:
The EUR/TWD is likely to drift within the recent stable range as it is firmly above the recent average.
What could change it:
• Upside risk: A sharp increase in Eurozone economic indicators or a change in ECB policy could drive the euro higher.
• Downside risk: A reversal in trade optimism or significant declines in export performance in Taiwan could pressure the TWD against the euro.
