THE Australian dollar has opened lower, dipping below 104.5 US cents during the overnight session as worries about Europe prompted investors to turn to the US dollar.
A negative day on Wall Street also dampened appetite for the Australian dollar.
At 7am AEDT today, the local currency was trading at 104.47 US cents, down from yesterday's local close of 104.68 US cents.
Overnight, the local currency moved between a low of 104.19 US cents and a high of 104.78 US cents.
BNP Paribas currency strategist Vassili Serebriakov said the ongoing turmoil in Cyprus and Italy were the main concerns for markets.
"The headlines have been worrisome from Europe and that has been weighing on sentiment," Mr Serebriakov said from New York.
"It was more of a risk off kind of environment, with equities generally lower and the US dollar stronger."
The banks in Cyprus were due to open on Thursday, while Italy appears no closer to forming a government a month after elections were held.
Despite the move lower in offshore trading, the Australian dollar was the best-performing currency among the Group of 10 nations in March.
The local unit has risen about 2.2 per cent against the US dollar so far in March, and was up about two per cent against the Japanese yen and more than four per cent firmer against the euro.
Mr Serebriakov said there was "probably an element of profit taking" during the overnight session, given the Australian dollar's recent gains.
In economics news today, the TD Securities-Melbourne Institute inflation gauge for March is due for release.
Also, the Australian Bureau of Statistics will publish job vacancies figures for the three months to February and the Reserve Bank of Australia releases financial aggregates figures for February.
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