At 12noon (AEST), the Australian dollar was trading at $US0.8366/72, down from yesterday's close of $US0.8390/93.
During the morning, the local currency traded between a low of $US0.8335 and a high of $US0.8378.
The Australian dollar opened the local session at 7am AEST following the overnight session at $US0.8351/56 and climbed higher through the morning.
Custom House Global Foreign Exchange corporate risk manager Charles Wiggins said the local currency had settled in a trading range between $US0.8300 and $US0.8400.
"It seems like the Aussie dollar has come back into a range trading pattern,'' Mr Wiggins said.
"As soon as you get to $US0.8400 traders are looking at selling off and when it's getting below the $US0.8300s now people are starting to look to buy up.''
Mr Wiggins said the Australian dollar was trading close to its 30-day moving average of about $US0.8350.
He said investors were wary of taking big positions while the US government's package to buy up bad debt from financial firms was unconfirmed.
"Everybody is sitting on their hands waiting to see what the actual details of it are before they really do anything dramatic,'' Mr Wiggins said.
"Most traders are taking short-term positions, no long-term acquisitions at the moment.''
In contrast to the large moves of recent months - the Australian dollar reached $US0.9849 in July before declining to $US0.7800 last week - the local currency has traded between $US0.8300 and $US0.8400 for the past two days.
Mr Wiggins said he expected the volatility to return once the US rescue package was finalised by US lawmakers.
"Once it gets announced, obviously depending on how it's seen, you could again see some fairly wild swings,'' Mr Wiggins said.
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