The Brazilian real and the Mexican peso struggled to hold gains against a softer dollar on Tuesday, with investors awaiting the outcome of the US Federal Reserve's two-day meeting on Wednesday.
While an interest rate hike was priced in, the dollar fell as bets increased that the Fed might slow its pace of hikes in the coming year in the light of weak economic data.
Analysts said a "dovish hike" may provide some relief to emerging market currencies by keeping the dollar pressured.
Mexico's peso crept higher as a rally on the budget presented by new President Andres Manuel Lopez Obrador subsided.
"Fundamentally, the budget is a piece of paper. What really matters is the implementation of that budget," said Edward Glossop, a Latam economist with Capital Economics.
"I think investors are starting to turn their attention to other risks AMLO presents," referring to the acronym for the new president.
The last two months have been particularly difficult for Mexican markets as investors questioning the new government's policy direction. The Brazilian real trimmed early gains and steadied, while stocks in Sao Paulo rose a half percent. Airliner Gol Linhas Aereas was the best performer, up 3.3 percent.
Gains on the index were capped as energy stocks tracked lower oil prices.
"The next cue for Brazilian assets will be the inflation report later this week, which will help give an indication on whether the central bank's dovish tone at the last meeting is something that's a bit more persistent," Glossop said.
Earlier this month, the central bank held interest rates at an all-time low and hinted it will hold off hikes for longer than expected as inflation slowed.