Federal Reserve Bank of Dallas President Richard W. Fisher said that the U.S. will probably see slower economic growth rather than a deeper downturn.

The most likely scenario is that the U.S. will avoid a ``prolonged period of negative economic growth,'' Fisher said during an interview today before a speech in Fort Worth, Texas, without mentioning the term ``recession.'' He also said he's hearing increasing expressions of concern about inflation from executives he speaks with, which got his ``attention.''

Fisher spoke after data this week showed the U.S. is moving closer to a recession, while inflation is accelerating at the same time. He said today that the slowdown in growth will probably last for a ``couple'' quarters and warned that it may be difficult to quickly raise interest rates.

Fed officials anticipate growth of 1.3 percent to 2 percent this year, down from 2.5 percent in 2007. Two members of the panel charged with dating U.S. economic cycles said yesterday that it's too early to decide whether the U.S. is in recession.

TECHNICAL OUTLOOK – DAILY CHARTS

EUR/USD

Resistance: 1.4965

Support: 1.4610

Sentiment: bullish

GBP/USD

Resistance: 1.9825

Support: 1.9410

Sentiment: mixed

AUD/USD

Resistance: 0.9300

Support: 0.9010

Sentiment: bullish but getting overbought, caution!

USD/JPY

Resistance: 108.65

Support: 106.50

Sentiment: mixed

USD/CAD

Resistance: 1.0125

Support: 0.9865

Sentiment: mixed

USD/CHF

Resistance: 1.0960

Support: 1.0600

Sentiment: mixed

GPB/JPY

Resistance: 214.05

Support: 207.85

Sentiment: mildly bullish

TECHNICAL OUTLOOK – DAILY CHARTS

EUR/USD

Resistance: 1.4965

Support: 1.4480

Sentiment: mildly bullish

GBP/USD

Resistance: 1.9740

Support: 1.9340

Sentiment: mixed

AUD/USD

Resistance: 0.9200/0.9300

Support: 0.8885

Sentiment: bullish but getting overbought, caution!

USD/JPY

Resistance: 108.65 

Support: 106.50

Sentiment: mildly bullish

USD/CAD

Resistance: 1.0125

Support: 0.9865

Sentiment: mildly bullish

USD/CHF

Resistance: 1.1105

Support: 1.0865

Sentiment: mixed

GPB/JPY

Resistance: 215.50

Support: 207.85

Sentiment: mildly bullish

FX WEEKLY REPORT, February 11, 2008

Group of Seven officials, warning of further financial-market turmoil, indicated they'll be forced into more interest-rate cuts and tax reductions to shore up the global economy.

Finance ministers and central bankers ended a weekend meeting in Tokyo with a statement that ``downside risks persist,'' including the U.S. housing slump and tighter credit conditions. Without proposing specific remedies, the group pledged ``appropriate actions, individually and collectively.''

The speed at which the American credit-market collapse spread to other parts of the world demonstrates the need for greater communication and coordination, U.S. Treasury Secretary Henry Paulson said. More than $6.7 trillion has been wiped off the value of global stocks since the beginning of the year.

Bank of Canada Governor Mark Carney signaled he'll lower rates, and European Central Bank President Jean-Claude Trichet repeated that risks to Europe's expansion have increased. Luxembourg Finance Minister Jean-Claude Juncker, who represents the 15-nation euro region, said some European countries have room to cut taxes or increase spending.

G-7 officials also discussed measures to tighten oversight of financial markets without reaching agreement, and kept pressure on China to allow the yuan to appreciate.

The euro rose against 12 of the 16 most-traded currencies after European Central Bank President Jean-Claude Trichet said ``economic fundamentals are sound'' and that no policy makers are calling for interest rate cuts.

The euro also gained for a second day against the dollar, paring its 2 percent loss last week, after Group of Seven officials released a statement warning of risks to growth from a U.S. housing slump and financial market losses.

The Australian dollar rose and government bonds fell after the central bank said it is likely to raise interest rates from an 11-year high to curb inflation. New Zealand's dollar also gained.

Australia's currency was the best performer of the 16 most- traded as the central bank in its quarterly statement said inflation was ``uncomfortably high,'' prompting traders to increase bets policy makers will raise rates from 7 percent as soon as next month. The Australian and New Zealand dollars also advanced as the extra yield of the nations' two-year bonds over similar-maturity Treasuries widened to the most in two decades.

TECHNICAL OUTLOOK – DAILY CHARTS

EUR/USD

Resistance: 1.4670

Support: 1.4355

Sentiment: mixed

GBP/USD

Resistance: 1.9765

Support: 1.9340

Sentiment: mixed to bullish

AUD/USD

Resistance: 0.9100/0.9200

Support: 0.8885

Sentiment: bullish

USD/JPY

Resistance: 108.65 

Support: 105.70

Sentiment: mildly bullish

USD/CAD

Resistance: 1.0125

Support: 0.9865

Sentiment: bearish

USD/CHF

Resistance: 1.1175

Support: 1.0865

Sentiment: mixed

GPB/JPY

Resistance: 212.60

Support: 203.90

Sentiment: bearish

Ben S. Bernanke's decision to lower interest rates 1.25 percentage points last month will end the dollar's two-year slide, according to the world's biggest currency traders.

TECHNICAL OUTLOOK – DAILY CHARTS

EUR/USD

Resistance: 1.4966/1.5000

Support: 1.4590

Sentiment: mixed

GBP/USD

Resistance: 1.9825

Support: 1.9340

Sentiment: bearish

AUD/USD

Resistance: 0.9200

Support: 0.8765

Sentiment: bullish

USD/JPY

Resistance: 107.90

Support: 104.20

Sentiment: bearish

USD/CAD

Resistance: 1.0180

Support: 0.9760

Sentiment: mixed

USD/CHF

Resistance: 1.1120

Support: 1.0840

Sentiment: mixed

GPB/JPY

Resistance: 215.15
Support: 203.90
Sentiment: bearish

Fed Versus ECB

While two Fed cuts slashed the target rate for overnight loans between banks to 3 percent in nine days, the European Central Bank kept its benchmark rate unchanged at a seven-year high of 4 percent in an attempt to curb inflation. The ECB will keep rates unchanged at its Feb. 7 meeting, according to all 55 economists surveyed by Bloomberg News.

``If aggressive cuts by the Fed can stimulate the economy, then the U.S. will definitely lead the way in terms of economic recovery,'' Yu said. ``The ECB is behind the curve, so it's time to move back'' into the dollar, he said.

Deutsche Bank AG, the world's largest currency trader, predicts an 8 percent gain in the dollar this year as the euro- zone economy expands 1.6 percent, lagging behind the 1.9 percent growth projected for the U.S. For 2009, Frankfurt-based Deutsche Bank puts growth at 2.6 percent in the U.S. and 1.9 percent in Europe.