NEW YORK (Bloomberg) — The dollar posted the biggest weekly decline against the yen since May after reports showed housing starts, producer prices and consumer confidence fell.The US currency also had the largest weekly drop versus the euro since December as traders stepped up bets the Federal Reserve will cut interest rates. Investors pushed the dollar to a one-month low against the yen after Fed Chairman Ben S. Bernanke said this week inflation is likely to slow.

“It definitely made a week for dollar bears,” said Michael Woolfolk, senior currency strategist at the Bank of New York in New York. “We are seeing a stream of atrocious data that may dim the growth outlook in the US. This hit the dollar.”

The US currency dropped almost 2 percent this week, the largest since the week ended May 12, to 119.25 yen at 4 p.m. in New York. The dollar also declined 1 percent at $1.3140 per euro from a week earlier.

The euro trimmed its weekly advance against the dollar as the European Commission cut its inflation prediction, while boosting its forecast for economic growth.

The dollar initially dropped to the lowest since January 9 against the yen and approached a one-month low versus the euro following the housing start report. The decline then stalled amid speculation Asian investors were buying dollars, said Matthew Kassel, director of proprietary trading at ING Financial Markets LLC in New York.

US housing starts slumped 14.3 percent to an annual pace of 1.408 million, less than forecast and down from December’s 1.643 million rate, the Commerce Department said on Friday. Building permits declined 2.8 percent to a 1.568 million pace.

Prices paid to US producers dropped 0.6 percent last month followed a 0.9 percent increase in December, the Labour Department said on Friday. The so-called core rate, which excludes food and energy costs, rose 0.2 percent for the second consecutive month.

“Over the last several days we have had a somewhat less supportive backdrop for the dollar, the housing data being the last of that,” said Lara Rhame, a New York-based senior currency strategist at Credit Suisse. “The market had gotten a little bit ahead of itself thinking that the Fed would signal a possible rate hike.”

Rhame said she is “neutral” on the dollar, forecasting $1.30 per euro in three months.

The US currency’s decline was greatest from February 13 to 16, losing 1.35 percent against the euro and 2.2 percent versus the yen. It was the biggest three-day decline against the yen since July, and the largest versus euro since December

“The dollar has been oversold this week based on negative data from the US,” Kassel said. “We are seeing Asian names buying back the dollar against the yen.” He declined to specify who those buyers are.

The Reuters/University of Michigan’s preliminary index of sentiment fell to 93.3 this month from 96.9 in January. The gauge averaged 87.3 last year.

Fed funds futures suggest a 32 percent chance the Fed will lower its key rate a quarter-percentage point to 5 percent at its August meeting, compared with a 10 percent chance a week ago.