The Australian dollar has closed below $US1.04 for the first time since November as investors poured into the US dollar amid ongoing talks on the fiscal cliff.

In recent trade it was at $US1.0357, down half a cent from the pre-Christmas close of $US1.0409 on Monday.

It was the Australian dollar's weakest close since November 21, when the currency finished the domestic trading day at $US1.0356.

During the day, the unit moved between $US1.0379 and $US1.0346.

The dollar opened the first local session since the two-day Christmas and Boxing Day break at $US1.0371 and remained under pressure throughout the day.

Easy Forex currency dealer Tony Darvall said the move in the Australian dollar was due to traders returning to the safety of the US dollar.

"There are US fiscal cliff concerns that are US dollar positive, at the moment anyway," Mr Darvall said.

However, he said the Australian dollar was not likely to fall significantly, in part due to its strength against the Japanese yen.

The local currency peaked at a two-week high against the yen, and the US dollar hit its highest level against the Japanese currency since September 2010.

In recent trade the Australian dollar was at 88.82 Japanese yen, up from Monday's close of 87.80 yen, and at 78.30 euro cents, down from 78.96 euro cents.

The US dollar was at 85.79 yen, from 84.36 yen.

"The Aussie-yen cross rate is a big part of the Australian dollar's support structure," Mr Darvall said.

"You can't get a steep sell in the Aussie dollar if the Aussie rallies against the yen.

Mr Darvall said the the "type of gentle selling in the past three or four days is the type of selling that leads to buying".

US President Barack Obama cut short his Christmas holidays in Hawaii to return to Washington for talks with US Congressional leaders on the US fiscal cliff - tax hikes and spending cuts due to start in early 2013.

If they are unsuccessful in finding a solution, the measures were expected to push the US back into recession.

AAP