The Brazilian real gained 0.1 percent, partly recovering from a Friday selloff that drove it to its weakest level in 3-1/2 years. The Mexican peso firmed half a percentage point in international markets, while domestic trading was halted due to a national holiday.
Global markets rallied across the board as investors saw positive developments in two major sources of global uncertainty.
US home resales rose in October and a gauge of homebuilder sentiment climbed to a six-year high in November, signs of surprising vigor in the country's still-struggling housing market. Meanwhile in Washington, leading lawmakers expressed confidence that they could reach a deal to avert abrupt spending cuts and tax hikes that could plunge the US economy into another recession next year.
Expectations that euro zone countries will agree on Tuesday on a plan to fund Greece for at least two years added to market optimism.
"Most currencies are strengthening against the dollar as we see an improvement in the perception of risk," said Flavio Serrano, a senior economist with BES Investimento in Sao Paulo.
Also weighing on the Brazilian real were expectations that the central bank could intervene in the market to avoid further losses and defend the upper limit of an informal trading band of 2.0-2.1 reais per dollar where the currency has been stuck since July.