The Australian dollar is slightly lower after the European Central Bank (ECB) disappointed investors by taking no immediate steps fight the euro zone debt crisis.
The ECB left the door open to take action in the coming weeks but investors were expecting something more concrete after the bank's president Mario Draghi last week pledged to "do whatever it takes" to save the euro.
"Markets were hoping that Draghi would show up with a bazooka and he turned up with his pea shooter," Bank of New Zealand currency strategist Mike Jones said.
"That disappointment has taken its toll on the euro, in particular, but also the Aussie dollar."
At 0700 AEST on Friday, the Australian dollar was trading at 104.66 US cents, down from 104.77 cents on Thursday.
Late on Thursday night, the Australian dollar hit an five-month high of 105.80 US cent.
Mr Jones said the rally was because expectations were high ahead of the ECB announcement.
"There was a lot of anticipation that we would get something big from the ECB to combat the debt crisis," he said.
"All of that optimism was unwound after the (ECB) press conference."
Mr Jones said he didn't expect the Australian dollar to fall too much further and predicted it would trade in a range between 104.40 US cents and 105.00 cents on Friday.
"The ECB did provide a strong signal that it would be acting before too long, so that's going to prevent any large scale selling pressure on the euro and the Aussie," he said.
The next focus for markets will be Friday night's release of US non-farm payrolls data for July, the key indicator for American employment growth.
"The chances of a really nasty looking number are not that high," Mr Jones said.
"I think markets have been a little bit burnt from the volatility this week, so the reaction to payrolls may be a little bit more subdued than normal."