USD index drops to 100.50 as Fed rate cut expectations intensify

The US dollar index has declined 0.5% to 100.50, hitting its lowest level in two weeks as traders position for Wednesday's Federal Reserve meeting. Markets are pricing in an 85% probability of a 50 basis point rate cut, up from 65% last week, following recent softer US economic data. The greenback has weakened against all major counterparts, with EUR/USD climbing above 1.1100 and GBP/USD holding above 1.3150. Technical indicators show the dollar index breaking below its 50-day moving average at 100.85, with next support at 100.20 (August low). The Fed's dot plot and Powell's press conference will be crucial for dollar direction, as any dovish surprise could accelerate the current selloff. Conversely, a hawkish hold or smaller-than-expected cut might trigger a sharp dollar recovery from oversold conditions.