The Taiwan New Dollar just posted its sharpest two-day rally against the US dollar – ever. This wasn’t just any rally. So, how can we profit? Take a look at the iShares MSCI Taiwan ETF (EWT), suggests JC Parets, founder of AllStarCharts.
This was a vertical move – TWD/USD spiked over 10% in two sessions, tagging a near-three-year high in the process. It caught the entire FX complex leaning the wrong way. It was statistically off the charts.
Why is it happening? Market chatter is that Washington quietly asked Taipei to allow the Taiwan dollar to strengthen – an unspoken trade-off as part of ongoing tariff negotiations.
The official response was swift. Taiwan’s President Lai publicly dismissed the rumors. So did the central bank. But price action tells a different story.
Years of trade surpluses left many major Taiwanese companies net long dollars. Big time. And this move may have just flipped that script. Operators in other surplus-heavy Asian economies – South Korea, Thailand, Singapore – are watching. The TWD breakout could be the opening act for the next leg of dollar weakness across the region.
Here’s why this matters: When US traders express a bullish thesis on equities overseas, they are also expressing a bullish thesis on currency markets overseas. They are effectively selling dollars and buying local currencies.
International ETFs listed on US exchanges are a great way to gain this exposure. Just look at the chart of EWT:
It just bounced off a key polarity zone. The Taiwan New Dollar is breaking out of a multi-year reversal pattern. Intermarket confirmation is building as Southeast Asian markets assume leadership.
That’s the kind of setup we want to lean into in a weak dollar cycle.
