A good question. The answer seems to be that Duolingo prefers more literal translations and would reserve that sentence as the translation of "Nós estamos olhando os animais". If you don't agree you could always ask for your answer to be accepted using the "Report a Problem" button.
Which translation? The model answer at the top of this page is in the present tense. Actually the "nós" form of the present tense and the past tense are identical for regular verbs like "olhar" (the Portuguese have the option of writing "olhámos" for the past tense). See: http://www.conjuga-me.net/verbo-olhar