The Australian dollar fell around a third of a US cent after nearing parity, before rising slightly to finish the day right about where it started, as traders await key employment data on Thursday.
Deutsche Bank foreign exchange strategist John Horner said the local currency weakened overnight after Slovakian politicians voted against a revamp to the eurozone bailout fund.
The 16 other eurozone members have approved the changes to the bailout fund that requires the backing of all 17 eurozone countries.
"It had been clear that once talks broke down amongst the coalition members a `no' vote was likely (in Slovakia)," Mr Horner said.
"It's still likely to come through and be passed later in the week, with the support of the opposition party."
At 1730 AEDT, the Australian dollar was trading at 99.67 US cents, down from 99.72 cents yesterday.
Mr Horner said the overnight focus would most likely remain on developments from Europe's sovereign debt crisis.
"Going forward, the more significant stories remain plans to bolster the European financial system through recapitalisations and also what impact that has on risk sentiment."
Investors were eagerly awaiting local labour force data from the Australian Bureau of Statistics due at 1130 AEDT tomorrow, Mr Horner said.
Economists expect to the figures show 10,000 jobs had been added to the economy in September and the unemployment rate steady at 5.3 per cent.
However, Mr Horner is tipping 10,000 jobs to have been lost in the month.
He said this would add to the case for the cash rate to be cut in November.
"If we do see a softer report tomorrow then that would weigh on the Aussie in the short term."
Since 0700 AEDT, the local unit traded between 98.66 US cents and 99.95 cents.
The RBA's trade weighted index was at 73.3, down from 73.4.
