The Brazilian real dipped on Tuesday on worries about the country's economy and pension reform plans, while other Latin American currencies rose against a weaker dollar.
The Brazilian real edged lower for a second day, while the Mexican peso hovered near two-week lows even as the greenback touch new lows against a basket of major currencies.
Minutes from the Brazilian central bank's June policy meeting showed the economy is stagnating and uncertainty surrounding economic and fiscal reforms is clouding the growth and inflation outlook.
Investors are looking ahead to a congressional committee vote on the revised pension reforms bill, expected as soon as Thursday.
"BCB minutes emphasize that pension reform is the prerequisite for any easing," Citi analyst Dirk Willer wrote in a note.
"Not only does the board see reforms as the key risk factor in the balance of risks to inflation, reforms are also necessary to drive down uncertainty and the structural rate."
The dip in the dollar, however, helped the Colombian, Chilean and Argentine pesos.
Emerging market currencies have benefited from a weaker dollar that has been dented by the prospect of monetary policy easing by the Federal Reserve.
Federal Reserve Chairman Jerome Powell is expected on Tuesday to maintain a more dovish posture after the US central bank last Wednesday signaled it could cut interest rates as early as July to battle growing global and domestic economic risks.
"We do not expect a significant deviation from last week's script but rather more context to how tied to the market's hip Powell really is and whether a 50 basis point cut next month is a possibility," Mazen Issa, senior FX strategist at TD Ameritrade.
Financial markets across the globe were unnerved after the United States imposed sanctions on Iran, heightening tensions between the two nations, while prospects of a US-China trade deal have dimmed after a senior US official said President Donald Trump is "comfortable with any outcome" from the trade talks.
Brazil's main Bovespa stock index fell more than half a percent, dragged down by a 3% loss for Smiles Fidelidade SA after J.P. Morgan downgraded the mileage subsidiary of airline Gol to neutral.
The other big decliner was Brazilian stock exchange operator B3 SA, which fell 3.8%.