• US Dollar dealt bad hand as market considers higher initial Fed rate cut.
• Market prices in high odds of a 50 bps cut at Wednesday's FOMC meeting.
• Fed Dot Plot unlikely to validate an aggressive rate cut path.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, is extending a corrective decline amid rising dovish expectations for the Federal Reserve's (Fed) meeting on Wednesday. The DXY is trading lower for the third consecutive day, near 100.70, as the market prices in a decently high probability of a 50-basis-point cut.

With signs of a slowdown in inflation and cooling in the labor market, investors have grown confident in a 50 bps cut and over 100 bps of easing by year-end.