The Fed was expected to hold interest rates steady on Wednesday but may hint it was on track for an increase in June, according to a Reuters poll of economists.

Higher US rates could dampen the allure of high-yielding emerging market bonds, reducing the value of their currencies.

Also providing hints about the path of US monetary policy, the US Labor Department was scheduled to release on Friday April's nonfarm payrolls report.

Analysts have generally been optimistic over the figures, with economists forecasting a 185,000 payroll gain, up from March's 98,000.

The Brazilian real strengthened 0.1 percent following a long weekend, while the Mexican peso was down 0.7 percent. The Chilean peso slipped 0.1 percent, pressured by a decline in prices of copper.

Brazil's benchmark Bovespa stock index rose 2 percent, supported by shares of banks such as Banco Bradesco SA and Ita? Unibanco Holding SA.

Trading volumes were thin as investors awaited further developments in the government's efforts to pass wide structural reforms, including a pension system revamp. Bets on stronger-than-expected opposition in Congress have reduced demand for Brazilian assets in recent weeks.

Falling shares of planemaker Embraer SA helped to limit gains of the index following a 59 percent drop in first-quarter net income.