The reason for the USD appreciation reversal! The Fed's stance softens, why did the New Taiwan Dollar suddenly strengthen to the 31.4 level?

The fundamental drivers of the US dollar’s appreciation are waning

To understand the recent strong rebound of the New Taiwan dollar, we must first see why the US dollar has sharply retreated from its high levels. Over the past period, the dollar maintained its appreciation mainly due to the Federal Reserve’s hawkish stance—expectations of continued rate hikes led to large capital inflows into dollar assets. However, this situation has quickly reversed in the face of recent dovish signals from Fed officials. Market expectations for a rate cut in December have increased, directly impacting the dollar’s attractiveness, causing the dollar index to fall from its highs to around 100.16, with upward momentum clearly weakening.

Asian currencies finally get a chance to breathe

As the reasons for the dollar’s appreciation weaken, major Asian currencies such as the yen and won have gained room to rebound. The New Taiwan dollar performed particularly well today, opening at 31.42 and quickly rising to 31.405, an appreciation of 4.2 cents. The market once exclaimed, “Hot money is finally willing to come in.” This rebound is not merely a currency movement but the result of multiple factors resonating together.

Taiwan stocks’ strength becomes a new booster for the New Taiwan dollar

Today, Taiwan stocks surged driven by electronics heavyweight stocks, providing strong support for the New Taiwan dollar. As the month-end approaches, actual foreign exchange selling by exporters has gradually entered the market, coupled with foreign capital inflows, creating a scenario of both stocks and currency rising together. This resonance has made the New Taiwan dollar’s appreciation more vigorous and has filled the market with expectations for the future trend.

The US dollar’s appreciation momentum weakens but has not fully reversed

Although the dollar has retreated from its highs, analysts warn that the dollar index still remains above the 100 level, indicating that the overall dollar pattern still retains relative strength. This means that the appreciation potential of the New Taiwan dollar is still somewhat limited by a ceiling. Currently, the New Taiwan dollar is fluctuating around 31.415, and whether it can further break through the 31.3 level depends on whether Fed rate cut expectations can continue to deepen and whether foreign capital flows remain stable.

Practical advice for market participants

Industry insiders analyze that this rebound is driven by two engines: the fading of dollar appreciation caused by Fed policy shifts and the attraction of foreign capital back into Taiwan stocks. If these two forces can continue, the New Taiwan dollar indeed has the chance to test lower levels. However, traders also warn that the international currency market still faces many variables—US economic data trends and changes in China’s economy could rewrite the Asian currency market landscape. Practically, exporters are advised to sell on rallies around 31.4 to lock in profits, while importers can patiently wait for pullback levels to re-enter the market.

Outlook and reflections

The recent strength of the New Taiwan dollar symbolizes a shift in market sentiment. From the weakening of the dollar’s appreciation to the inflow of hot money and active dollar selling by exporters, the entire ecosystem is being reshuffled. Whether 31.4 can become a new support zone will be an important reference for judging the future trend.