The Australian dollar is slightly weaker, less than 24 hours before the US Congress needs to reach a deal to stop the world's biggest economy defaulting on its debt.
At 1700 AEDT on Wednesday, the local unit was trading at 95.25 US cents, down marginally from 95.33 cents on Tuesday.
During late morning trade, the currency peaked at 95.45 US cents, which was close to the four-month high of 95.50 cents reached on Tuesday.
But the currency fell from its high after US Republican House Speaker John Boehner failed to convince Tea Party-backed conservatives to back his party's own bill to extend the US debt ceiling until February 7.
"We are merely dancing to the tune being played in the House and Senate at the moment," Westpac chief currency strategist Robert Rennie said.
A last minute deal in the US Senate to avert a financial crisis could see the Australian dollar soar above 96 US cents on Thursday, he said.
As long as we can resolve this issue fairly quickly, there's the potential for Aussie to push onwards, possibly towards 97 cents," Mr Rennie said.
But a failure to reach a debt deal could see the Australian dollar fall below 94 US cents.
"Getting into a technical default situation for the US would be a very negative environment for the Australian dollar," Mr Rennie said.
"If I were putting money on it ... logic will prevail: the Senate will develop a bill."With the clock ticking in the US, Senate majority leader Harry Reid, a Democrat, and Republican minority leader Mitch McConnell are holding Tuesday night talks.