Europe's common currency should be cheered by a weekend Group of Seven meeting at which an influential forecast for U.S. growth was slashed and speculation over Washington's long-standing strong dollar policy refused to die.

New U.S. Treasury Secretary Paul O'Neill warned reporters he would not be repeating attempts to explain Washington's carefully-woven mantra that a strong dollar was in the national interest. But analysts took this as confirmation that his comments to a German newspaper had been candid, signaling that the U.S. would not back political rhetoric with policy action to oppose market forces if these drove the currency down. News on Saturday that the International Monetary Fund had almost halved its forecast for U.S. growth this year to 1.7 percent, from 3.2 percent, adds to the currency's worries and followed a tide of negative data last week that reinforced the slowdown picture. But the headline number would suffer closer scrutiny and might not be all that bad after all, analysts warned.