The USDTWD (US Dollar Taiwanese Dollar) is a popular currency pair traded in the foreign exchange market. This pair represents the value of the US dollar (USD) relative to the New Taiwan dollar (TWD). For forex traders, understanding the intricacies of the USDTWD can provide valuable insights into the economic relationship between the United States and Taiwan.

Overview of the USDTWD Pair

The USDTWD is categorized as a minor or exotic currency pair, given the relatively small size of the Taiwanese economy compared to the US. However, it still sees significant daily trading volume and can provide unique trading opportunities.

Some key facts about USDTWD:

  • Base currency: US Dollar (USD)
  • Quote currency: New Taiwan Dollar (TWD)
  • Typical spread: 2-5 pips
  • Trading hours: 24 hours, 5 days a week
  • Forex symbol: USDTWD

The USDTWD exchange rate shows how many New Taiwan dollars are needed to buy one US dollar. For example, a rate of 30.500 means one US dollar can purchase 30.500 Taiwanese dollars. The USDTWD rate tends to fluctuate between 30 and 33 TWD per 1 USD.

What Factors Impact USDTWD Exchange Rates?

There are several macroeconomic factors that can influence fluctuations in the USDTWD forex rate. Here are some of the most significant drivers:

Differentials in Interest Rates

As with most currency pairs, relative differences in interest rates between the US and Taiwan can impact USDTWD exchange rates. If the US Federal Reserve raises interest rates while Taiwan’s central bank holds steady, demand for US dollars may rise as investors seek higher yields. This would drive up the value of the US dollar against the TWD.

Economic Growth and Performance

Stronger economic growth and key indicators in the US compared to Taiwan can strengthen the US dollar. For example, higher US GDP growth may attract foreign capital inflows, boosting demand for USD. Conversely, an economic slowdown in Taiwan could potentially weaken the TWD.

Inflation Levels

Widening inflation rate differentials between the US and Taiwan can influence the USDTWD exchange rate. For example, a rise in US inflation that outpaces Taiwan’s could erode the USD’s purchasing power, weighing on the currency pair. This relationship is complex, however, and can depend on central bank policy reactions.

Political and Geopolitical Events

Political uncertainty and events can trigger volatility in USDTWD. For instance, fluctuations in US-China relations could impact Taiwan’s economy and currency due to its proximity and complex relationship with mainland China. Upcoming US or Taiwanese elections can also stir short-term currency swings.

Central Bank Policy Divergence

Divergent monetary policies by the US Federal Reserve and Taiwan’s central bank can impact the relative valuation between the dollar and TWD. Aggressive easing by Taiwan while the Fed takes a hawkish turn could potentially weigh on the USDTWD rate, for example. Policy signals are therefore important drivers.

Risk Appetite and Market Sentiment

In periods of strong risk appetite, carry trades where investors borrow in low-yielding currencies like the USD to buy the higher-yielding TWD tend to rise. This can lift the TWD relative to the safe-haven dollar. When market uncertainty increases, however, these carry trades are unwound, potentially strengthening the USD against the TWD.

Technical Trading Factors

In addition to fundamental drivers, technical indicators, chart patterns and historical price levels can provide trading signals and impact directional momentum in USDTWD. These technical signals should be analyzed alongside macroeconomic developments.

USDTWD Trading: Key Considerations

When trading the US dollar – Taiwan dollar currency pair, there are some unique factors traders should keep in mind:

Taiwan is Viewed as a Small, Open Economy

Despite being a major Asian economy, Taiwan’s small size relative to the US means USDTWD exchange rates are primarily driven by US-based drivers. Developments in Taiwan alone usually have minimal impact on the broader forex market.

While not directly pegged, the Taiwan dollar does tend to track overall exchange rate movements of its larger neighbors, especially China, Japan and South Korea. Traders should watch for regional FX trends.

Taiwan’s Central Bank Maintains Stability

Taiwan’s central bank is active in FX markets to limit TWD volatility versus the dollar. Too much TWD strength or weakness creates economic risks. The bank utilizes market interventions and interest rates to maintain relative stability.

TWD Has a Mild Uptrend Versus USD

Despite some fluctuations, the Taiwan dollar has exhibited a gentle long-term uptrend against the greenback over past decades. This is tied to Taiwan’s persistent trade surpluses with the United States.

Low Interest, LimitedYield Differential with USD

With Taiwan’s benchmark interest rate at just 1.125% as of 2023, the yield spread between TWD and USD deposits is fairly narrow. This limits the upside for carry trades.

headline swings can be high and sharp

USDTWD is prone to high volatility around news events and developments in US-Taiwan relations. China tensions, elections and economic data can trigger aggressive short-term moves.

Trading the USDTWD: Strategies and Approaches

Now that we’ve covered the fundamentals behind the USDTWD pair, let’s look at some ways traders try to profit from fluctuations in the exchange rate:

Range Trading

With the Taiwan dollar kept relatively stable versus the greenback, the USDTWD rate oscillates up and down within a definable range. This makes range trading strategies popular, buying near support and selling at resistance.

Breakout Trading

Traders also look for breakouts above range resistance or breakdowns below support to capture larger directional moves in USDTWD. However, breakouts should be confirmed with high volume.

Reversion to the Mean

With a long-term mild uptrend, shorting rallies in USDTWD back to the midpoint of its trading range is a common mean reversion strategy. The 20- and 50-day moving averages provide dynamic mean levels.

News-based Trading

Major news events like US and Taiwan economic data, elections, interest rate decisions and geopolitical tensions can trigger volatile breakouts. Short-term traders can benefit from sharp post-news moves.

Intermarket Analysis

Watching currency pairs like USD/JPY, USD/CNH and USD/KRW can provide clues on regional USD flows that will likely impact TWD. Analogous Taiwanese assets like stocks and bonds can also signal turns.

Carry Trades

Though upside is limited by low yields, some traders engage in USDTWD carry trades, seeking to capture the yield differential between USD and TWD funding rates. Risks include carry unwinding.

Hedging Strategies

Taiwanese companies importing US goods or trading heavily with the US can hedge USD transactions with USDTWD to limit exchange rate risk. Some speculators attempt to profit from hedging flows.

Key Technical Levels in USDTWD

In addition to monitoring economic developments, savvy USDTWD traders also pay close attention to the following key technical points on the price chart:

  • 30: Psychological round number and key low in multi-year range
  • 30.50: Support level on pullbacks within upward range
  • 31.25: Midpoint of typical USDTWD trading range since 2020
  • 32: Upper boundary of trading range, resistance on rallies
  • 32.50: Major ceiling and resistance in uptrend, 100-day moving average
  • 33: Major resistance level, pre-pandemic range high

These chart levels help provide context on USDTWD’s prevailing trend and trading bias over varying time frames.

How Central Banks Impact USDTWD Volatility

Monetary policy shifts and actions taken by central banks can have a major influence on volatility and price swings in currency pairs like USDTWD. Here’s how the main central banks impact this pair:

US Federal Reserve

As Taiwan’s second largest trade partner, Fed interest rate changes directly impact demand for USD and capital flows, driving USDTWD volatility. Hawkish Fed policy tends to lift the dollar against Asian currencies. Dovish easing cycles like 2020-2021 have the opposite effect.

Central Bank of the Republic of China (Taiwan)

Taiwan’s central bank utilizes frequent FX interventions, policy rate adjustments and macroprudential tools to maintain TWD stability versus the dollar. Dramatic policy changes are rare but can trigger aggressive USDTWD reactions when they occur.

People’s Bank of China (PBOC)

Though not directly involved in USDTWD, the PBOC’s management of the Chinese yuan impacts regional currency markets. Yuan devaluations spur competitive depreciations across Asia, pressuring TWD. PBOC easing could potentially aid the TWD by weakening China’s export competitiveness.

Bank of Japan (BOJ)

As a major regional economy, the BOJ’s ultra-dovish monetary stimulus has spill over effects on Asian currencies. Prolonged yen weakness driven by BOJ asset purchases may aid the TWD’s stability against the dollar.

Impact of US-Taiwan Relations on USDTWD

While often overlooked, the complex geopolitics between the United States and Taiwan have profound implications on the USDTWD exchange rate. Here are some of the key factors at play:

Diplomatic Tensions with China

China views Taiwan as a breakaway province, not an independent nation. Periodic spikes in tensions across the Taiwan Strait—such as Chinese military drills—can destabilize the TWD. However, the US has supported Taiwan with arms sales and unofficial diplomacy.

Close Economic Partnership

The US and Taiwan have forged an increasingly close economic relationship over the past three decades. The US is Taiwan’s second largest trade partner, while Taiwan is the US’s 8th largest goods trading partner. This interdependency has policy impacts on the USDTWD rate.

Potential Trade Policy Shifts

Any major changes in trade policy between the US and Taiwan, such as expanded bilateral trade deals or disputes over tariffs, could substantially influence demand for dollars and TWD. Rhetoric by US and Taiwanese leaders is closely watched.

Taiwan’s Strategic Importance

Taiwan’s outsized influence in global semiconductor manufacturing increases its strategic importance for US interests in Asia. This technology role incentivizes continued US protection of Taiwan in the face of Chinese pressure, supporting the TWD.

Currency Manipulation Concerns

Taiwan was labeled a currency manipulator by the US Treasury in 2020 and 2021, though removed in 2022. Renewed allegations of TWD devaluation to boost Taiwanese exports could worsen US-Taiwan frictions with FX market impacts.

Military and Security Cooperation

Despite lacking formal diplomatic ties, Taiwan and the US closely cooperate on security matters. Advanced US weapon sales and the potential for increased military ties contribute to Taiwan’s sense of protection from Chinese aggression.

Clearly, while not the world’s most prominent currency pair, shifts in the complex US-Taiwan relationship can stoke significant moves in the USDTWD exchange rate over time.

Long-Term Outlook and Forecast for USDTWD

Looking ahead, analysts expect the New Taiwan dollar to maintain its gradual appreciation path against the US dollar in the long run, while continuing to fluctuate within its typical trading range. Here are some factors that could impact USDTWD’s direction over the next 1-5 years:

  • Diverging interest rate paths, as the Fed hikes aggressively but Taiwan is constrained by low inflation and weak growth
  • Persistent Taiwan trade surpluses with the US even as bilateral tensions rise
  • Economic impacts in Taiwan from any potential conflict across the Taiwan strait
  • Changes in US and Taiwan leadership, given upcoming elections
  • Taiwan’s increased importance in US-China technology competition
  • Potential for US-Taiwan bilateral trade agreement, but legislative challenges remain
  • Continued central bank management of TWD’s value, limiting major upside or downside

Based on these dynamics, economists forecast the Taiwan dollar Index gradually appreciating to around 115 over the next five years, up from current levels around 110. In other words, a mild but steady uptrend remains the base case for USDTWD, although the pair will continue trading largely between 30 and 33 TWD per USD. Traders should closely monitor the technical landscape and fundamentals for opportunities within this range.

Key USDTWD Trading Resources for Forex Traders

For traders seeking to monitor USDTWD movements and develop successful trading strategies, here are some useful resources:

  • USDTWD Chart – Live price updates, interactive charts and analysis tools.
  • DailyFX USDTWD Forecast – Technical and fundamental forecasts from market experts.
  • BabyPips USDTWD Page – Beginner’s guide with economic calendar and trading position calculator.
  • Bloomberg USDTWD Quote Page – Real-time data, news and expert opinions on latest drivers.
  • Forex Factory Forums – Crowd-sourced trader discussions on trading strategies for USDTWD.
  • TradingView Charts – Advanced charting and technical indicators for USDTWD analysis.
  • FXTM Economic Calendar – Upcoming events and data releases that may influence USDTWD.
  • OANDA Currency Converter – Currency calculator to determine real-time exchange rates.
  • CME Group FedWatch Tool – Live market pricing of Fed interest rate expectations that impact USDTWD.

By regularly consulting these invaluable resources, USDTWD traders can refine their trading edge and analyze the most impactful dynamics influencing this unique Asian currency pair.


While sometimes overlooked for more prominent forex pairs, the US dollar – Taiwan dollar cross provides unique trading opportunities stemming from economic ties between the United States and Asia. Drivers ranging from relative interest rates, inflation trends, and central bank policies to trade flows, geopolitics, and market sentiment all influence USDTWD’s daily gyrations.

Although the Taiwan dollar maintains a gradual uptrend, USDTWD continues to fluctuate within a relatively defined range between 30 and 33 TWD per 1 USD. Savvy traders keep abreast of technical price levels, economic releases, monetary policy shifts, regional events and Taiwan’s complex relationship with both the US and China to identify profitable trading setups. As US-Taiwan ties evolve in coming years, balancing both collaboration and friction, the long-term path of the USDTWD cross remains rich with macro significance.