The euro weakened vis-Ã -vis the U.S. dollar today as the single currency tested bids around the US$ 1.3825 level and was capped around the $1.3955 level. U.S. equity markets were off sharply and traders dumped higher-yielding assets after the World Bank released a forecast that predictgs a more protracted recession. The World Bank now sees a 2.9% economic downturn this year, compared with its March forecast of a 1.7% pullback in growth. This revision to the growth forecast represents a significant shift and is consistent with the evolving view that global interest rates will probably be on hold for a longer period of time as central banks face more pressure to keep their monetary stimuli intact. European Central Bank President Trichet reported €œMy message at the present moment would be to say don't add to decisions already taken on both the fiscal side and in the support of financial systems. Do what has been decided as effectively and as rapidly possible.€ Trichet also called on governments to become adopt more sustainable fiscal positions and said the current 1.0% main refinancing rate target of the ECB is €œappropriate,€ adding policymakers will €œensure that inflation expectations remain solidly anchored and impervious to short-term changes in inflation, even in the current context.€ Data released in Germany today saw June business confidence climb to 85.9 in June from a revised 84.3 in May, the highest reading since November 2008. These data suggest the German economy may be gradually stabilizing. In U.S. news, all eyes will be on the Federal Open Market Committee this week as policymakers deliberate monetary policy. Most Fed-watchers believe there will be some dominant themes. First, the Fed is likely to emphasize stable interest rates, perhaps backtracking from public suggestions it may end its massive provision of liquidity. There was some market chatter last week that policymakers may adopt a policy similar to Bank of Canada€™s wherein the Fed would specify rates may be on hold through 2010. Second, the Fed is likely to discuss the composition of its balance sheet. Third, the Fed may discuss its rapidly-changing regulatory remit, especially as it is called on to become a regulator of systemic risk. Against this backdrop, Federal Reserve Chairman Bernanke is coming under fire for his putative involvement in forcing Merrill Lynch to be acquird by Bank of America. Euro bids are cited around the US$ 1.3435 level.