The Australian dollar closed more than a cent higher on the back of local sharemarket gains.
At 1700 AEST on Wednesday, the Australian dollar was trading at $US0.8236/38, up 1.35 per cent from Tuesday's close of $US0.8126/30.
Since 0700 AEST on Wednesday, the local unit traded between $US0.8188 and $US0.8305.
Easy Forex senior dealer Francisco Solar said the local unit traded in a relatively tight range considering the recent volatility on currency markets.
"It threatened to go below 82 US cents earlier today but it was quickly bought back up past US 82 cents," he said.
"It's just looking for some direction with negative sentiment around this week."
Mr Solar said the Australian dollar lost ground in morning trade after global miner Rio Tinto Ltd said the outlook for iron ore remains positive despite some caution about the near-term global economic outlook.
"We had a bit of a regain into positive territory, but we haven't even come close to making up the losses that we've seen of late, so we're still trading at the lower end of the range," he said.
The Australian share market closed almost one per cent higher after shrugging off worries over Europe's deepening debt crisis, taking its lead instead from a recovery on Wall Street.
The benchmark S&P/ASX200 index closed up 41.9 points, or 0.98 per cent, at 4307.2 points and the broader All Ordinaries index gained 44.1 points, or 1.03 per cent, to 4,330.4 points.
"That turn around we had in equities today, the Aussie latched onto that, jumping away from the lows that we saw today," Mr Solar said.
However, the overwhelming sentiment seemed to be on the downside, he said.
He predicts the local unit will trade between US$0.8140 and US$0.8350 overnight.
"Perhaps things will heat up in Europe and New York tonight," he said.
"There could be some upward bias here in New York overnight."
