USD/JPY Slumps on Dovish Fed Comments, Inflation Data Looms

The USD/JPY pair suffered its largest weekly loss since late July as it was driven lower by dovish remarks from senior Fed officials and suspected intervention from the Bank of Japan on behalf of the Japanese government.

However, an unexpectedly strong August payrolls report revived rate hike expectations for the Fed's September meeting, which had been waning due to these dovish comments.

The pair now awaits key inflation data releases this week, particularly Thursday's PPI and Friday's CPI reports, as they will help shape expectations for a potential rate hike in September.