The Australian dollar has lifted from a three-month low against its US counterpart as euro zone finance ministers unlock their multi-billion euro bailout fund.

At 0700 AEDT on Tuesday, the currency was trading at $US1.0198, up from $US1.0163 on Monday afternoon.The currency reached at fresh three-month low of 101.50 US cents late on Monday afternoon.

HiFX senior trader Stuart Ive said the Australian dollar moved higher as euro zone finance ministers held the inaugural meeting of the European Stability Mechanism board of governors in Luxembourg.

The ministers will oversee the ESM’s €500 billion ($A646.37 billion) warchest, designed to defend the euro zone against the sovereign debt crisis.

Mr Ive said the sharp falls in the Australian dollar over the past week made it attractive to some buyers overnight.The currency fell more than three and a half US cents in the seven days to Monday.

‘‘People saw this as a bit of an opportunity to buy and it took off a little bit on the positive sentiment ahead of the ESM meeting,’’ he said.

Mr Ive said the currency’s movements would be driven by events offshore over the next few days, before the release of key September jobs figures on Thursday switched attention back to the domestic economy.