The dollar has largely held its ground against a global wave of negativity stemming from Cyprus' rejection of a bank deposit levy.
At 5pm AEDT, the currency was trading at $US1.0379, down slightly from $US1.038 yesterday.
CMC markets foreign exchange dealer Tim Waterer said global equity and risk-sensitive currencies suffered overnight and today after the Cypriot government rejected a plan to levy bank deposits.
The proposal would see up to 10 per cent taken from bank deposits as part of a eurozone bailout package aimed at stabilising the country's banking system.
"Obviously the situation in Cyprus is keeping a lid on risk assets and that is impacting on the Australian dollar," Mr Waterer said.
But he said the Aussie's performance had been aided by a recent rise in the price of gold, which has pushed back above $US1600 an ounce.
"The Australian dollar is a commodity currency and it can have a correlation with some notable commodities, such as gold," he said.
Mr Waterer said traders were also hesitant to move the currency in either direction before the end of the US Federal Reserve's March meeting tonight.
While the Fed is highly unlikely to change interest rate settings, Mr Waterer said the dollar would likely push above $US1.04 overnight if the central bank reiterated its commitment to its stimulus measures.
But he said the currency could fall back towards $US1.03 if the Fed emphasised the improvements in the US economy and put the future of the stimulus program in doubt.
