With the Reserve Bank of Australia tipped to leave interest rates on hold again today, the gap between Australian interest rates and US rates will shrink further as rates rise in the world's biggest economy. This makes Australian cash investments less attractive to foreigners, decreasing demand for the local unit. Any decision on interest rates will be announced tomorrow morning. Concern for the local currency was refreshed over the weekend as the Australian dollar slumped from US75.73 cents to a one-month low of US74.81 cents and yesterday the currency regrouped slightly to finish at US75 cents, still well down on Friday's close The falls of the past few days look to mark the end of an extended rally during which the dollar moved from US69.84 cents at the start of the last financial year to US76.40 cents at its end in June. Westpac chief currency strategist Robert Rennie said the US Federal Reserve provided the greenback with stimulus last Friday lifting interest rates to 3.25 per cent and starting what is expected to be a period of sustained rate rises. "They will continue to raise rates ? We've got them raising rates to 4 per cent this year and continuing further to 4.5 per cent at some point next year," he said. "In that environment, you've got a strong economy, the prospect of higher rates and the US dollar surges higher against all currencies leaving the Aussie in its wake." Mr Rennie said employment data out of the US on Friday could also encourage the Australian dollar's downward trend and he predicted it could lose at least 3 cents by the end of the year. Geoff Bowmer, Macquarie Bank's foreign exchange division director, said while the dollar could continue to fall it was not about to "drop off the cliff". He said it was performing moderately on its own, but has wavered as the US dollar has started to flex its muscle. "Left to itself, the Aussie dollar is not going too badly, but against the tidal wave of US dollar strength, the Aussie is getting swept along," he said. "We don't think this US dollar strength has finished yet, we think the euro can be a bit weaker, we think the yen can be a bit weaker and if that's the case, locally we are targeting lows of 74 cents or lower." Mr Bowmer said the dollar was not as weak against the US dollar as some other currencies because of the country's relationship with China. He said China continued to be a powerhouse as well as a source of stimulus and would continue to demand commodities that Australia provided.