The Aussie dipped to $1.0419, from $1.0446 in early trade. Traders saw support from layered bids under $1.0400 with resistance at $1.0564, last week's high.
The local currency is still up more than two cents since it hit a low of $1.0165 earlier this month.
The New Zealand dollar skidded 0.8 percent on the day to $0.8230, with traders citing selling by macro funds, which knocked the kiwi across the board.
Both Antipodeans retreated against the yen as Japanese investors repatriated funds ahead of half-year book-closing at the end of September.
The kiwi suffered the most, shedding as much as one percent at one stage. It last traded at 64.33 yen, from 64.75 in early trade. It climbed 65.69 yen last week, its highest since late April.
The Aussie eased to 81.40 yen, from 81.63, having touched a three-week peak of 83.08 yen earlier this month.
Also weighing on risk sentiment was weak Asian stocks and uncertainty about Spain, the new epicentre of the debt crisis after Greece, Ireland and Portugal.
Investors were still waiting to see whether the Iberian nation would ask for a bailout and activate the European Central Bank's new bond-buying programme.
"It's an important week in Europe... and markets may be anticipating a risk-off outcome and hedging their bets," said Alvin Pontoh, a strategist at TD Securities in Singapore.
That said, should Spain ask for assistance, Pontoh said, it would give a boost to risk assets such as the Aussie dollar.
"But until that happens, markets are cautious."
Analysts said the Aussie dollar also looked vulnerable on growing worries about recent steep falls in the prices of Australia's top exports including iron ore.
That, along with a persistently high exchange rate, have prompted markets to bet that the Reserve Bank of Australia (RBA) will have to cut interest rates as early as next week.
Interbank futures pricing implies a two-in-three chance of an easing in the RBA's 3.5 percent cash rate in October, while fully pricing in a move in November.
National Australia Bank changed its call on rates on Monday predicting cuts in November and February due in part to the high currency, a slowdown in China and weaker commodity prices.
Yet, the Aussie remains a major beneficiary of foreign flows into the nation's government bonds as Australia is one among a shrinking pool of countries still rated triple-A by major agencies.
Australian debt futures rose, with the three-year contract up 0.05 points to 97.470 and the 10-year contract 0.055 points higher at 96.860. Both contracts scaled record highs in June.
The kiwi also stumbled versus the Aussie which rose 0.5 percent to a session high around NZ$1.2675. Traders said heavy selling versus the Aussie was a main driver of the kiwi's broad losses.
"There's an awful lot of kiwi sellers around the A$0.7950, A$0.8000 level (around NZ$1.2560-NZ$1.2480) and we haven't broken through the topside of that resistance level lately," said Alex Sinton, senior dealer at ANZ in Auckland.
"There are a lot of frustrated people who had been holding a long kiwi position, hoping for more topside," while adding that near-term support lay around NZ$1.2630.
Demand around $0.8220 was seen limiting losses versus the US dollar, while more bids were suspected around $0.8210, around a trough hit last week. Offers seen above $0.8300.
The kiwi risks more near-term selling if it is unable to break above a six-month high of $0.8354 hit earlier this month, given that bets for more gains have been steadily increasing, raising the chance of a sharp correction.
New Zealand government bonds edged up, pushing yields down as much as 3 basis points.