The greenback has enjoyed unrivaled performance against its peers in recent months but an inverted yield curve - generally seen as an indicator of a tepid growth - could undermine that strength.

The steady fall in yields comes not long after the US Federal Reserve suggested late last week that it may be nearing an end to its three-year rate hike cycle.

"It is a natural movement of exhaustion of the cycle of monetary tightening, since the policy takes time to be passed on to the economy," said Jason Vieira, chief economist at Infinity Asset Management.

Brazil's real slipped 0.3 percent. Consumer prices in the country likely fell the most in more than a year in November, a Reuters poll showed, suggesting the central bank could refrain from raising borrowing costs for even longer than expected.

The Bovespa stock index also fell marginally as energy stocks slid on lower oil prices.

State-controlled oil firm Petroleo Brasileiro SA was one of the index's top losers after reports indicated Brazilian anti-trust watchdog opened an investigation against the company.

Meatpacker JBS SA's 4.4 percent rise made it the index's top gainer. The firm's newly appointed chief executive said he would seek to boost profit margins.

Chile's peso weakened 0.2 percent, after the central bank left the benchmark interest rate unchanged on Tuesday, although it anticipates it will be necessary to continue with a gradual and cautious reduction of monetary stimulus.

Mexico's peso bucked the trend, firming 0.2 percent. Deputy Finance Minister Arturo Herrera said the government hopes the repurchase of some bonds used to fund a partly-built airport can be largely wrapped up by December 15.

The scrapping of the project, which new President Andres Manuel Lopez Obrador said was tainted by corruption, shook investor sentiment towards Latin America's second largest economy.

The Colombian peso was up for a fourth straight session, while the central bank acquired $357 million from an options auction.