Despite winning the ATP 250 clay event in 2013, the Argentine world number 54 is not among the seeds this year, but followed he up a straight-sets first-round victory over Benjamin Becker by sailing past Marcel Granollers 6-1 6-2.
Granollers' donwfall was his serve, claiming just one game in each set on his own delivery.
Monaco's next opponent will be Ivo Karlovic, who struck 11 aces as he safely negotiated his way past wildcard Nikola Milojevic 6-4 7-5.
"I was happy with the way I played today," Monaco told ATPWorldTour.com. "It is a big boost for my confidence whenever I win matches like this."
Home favourite and top seed Philipp Kohlschreiber will be confident of reaching at least the semi-finals after booking his place alongside qualifier Mate Delic in the last eight.
The 30-year-old world number 29 broke his opponent once during the opening set, but gave his opponent little chance in the second as he closed out a 6-3 6-1 result.
Delic overcame Dustin Brown - 114 places higher in the world rankings - 6-3 6-0 to seal his place in the quarter-finals.
Andreas Seppi is now one of just three seeded players left in the draw after cruising past Adrian Mannarino 6-2 6-1.
Fourth seed Joao Sousa's involvement is over following a 6-7 (8-6) 6-4 4-6 defeat to Austria's Jurgen Melzer, who meets Jiri Vesely - 6-1 7-6 (7-5) winner over Nikolay Davydenko - next.
Elsewhere, Denis Istomin knocked out qualifier Jason Kubler with a 3-6 6-4 6-2 win, after the latter was forced to conclude his first-round match with Alessandro Giannessi earlier in the day following bad light on Tuesday.