AUD/USD is trading just below key resistance as diverging economic signals between Australia and the United States drive renewed bullish momentum in the pair, which is currently trading at 0.6529, up 0.44% on Thursday.

Traders are closely monitoring Friday's release of the University of Michigan Consumer Sentiment report and accompanying inflation expectations data.

The preliminary June Consumer Sentiment Index is expected to be 53.5, up from 52.2 in May. Meanwhile, inflation expectations over the 1-year and 5-year horizons were previously reported at 6.6% and 4.2%, respectively.

Any downside surprise in consumer sentiment or signs that inflation expectations remain elevated could heighten volatility in the USD and significantly influence the near-term direction of the AUD/USD exchange

Australia's Consumer Inflation Expectations, reported on Thursday, surged to 5% in June, up from 4.1% in May. This increase has reignited speculation that the Reserve Bank of Australia (RBA) could pause any dovish pivot and maintain a hawkish policy stance in response to persistent inflation concerns.

In contrast, recent data from the United States has highlighted easing inflation trends and a stable labor market.

These developments have solidified expectations for Federal Reserve rate cuts, with markets now pricing in a cut for September.

Source: Fxstreet