At the time of writing on Monday, the US Dollar Index (DXY) has dropped to Friday’s low of 99.62. This decline is due to the surge of the Taiwan Dollar (TWD), which has reached its biggest intraday gain in over three decades. According to Bloomberg, speculations arise that exporters are quickly converting their US Dollar holdings to the island’s currency. These developments have a ripple effect on other Asian currencies, causing them to appreciate against the US Dollar, as seen with the Japanese Yen (JPY). These movements in the currency market are happening in a relatively thin market, with several Asian countries and the United Kingdom observing a public holiday.

This shift in the currency market brings an interesting aspect to the ongoing tariff negotiations between the US and Taiwan. The appreciation of the Taiwan Dollar is seen as a strategic move to reach a trade deal with the US. Taiwan’s government has announced that their negotiation team had their first round of meetings with the US on May 1, but no details were disclosed.

The rise of the Taiwan Dollar has affected the US Dollar Index, despite the Taiwan Dollar not being part of the index. The strong demand for the Taiwan Dollar due to the demands from the US to appreciate their currencies weakens the Greenback. On the positive side, if the DXY breaks above the resistance at 100.22, which supported the index in September 2024, it could signal a bullish trend and potentially reach 101.90. Conversely, a substantial bearish headline could push the DXY towards the support at 97.73, with further support at 96.94, 95.25, and 94.56. These levels represent a new price range that has not been seen since 2022. Therefore, it is crucial to choose the right broker that offers unique features to match your trading strategy. Explore our selection of top brokers to find the perfect fit for you.