It's not one I'd choose purely because Arwen is the name of one of the elves in Lord of the Rings - nerdy I know haha. I don't really have any other suggestions to give though, I don't really know any Welsh names off the top of my head.
I also agree with keeping your mind open to other possibilities which aren't Welsh, you need to both love the name and be able to picture yourself calling you LO it through every stage of their life. If you aren't in love with it then don't settle, you don't want to look back in a few years wishing you had called them something you loved rather than just liked. My OH is Irish but there isn't really many names which I love which are Irish, in the end we ditched the idea of an Irish name for that reason.
I hope you find a name that you both agree on