REFILE-FXOUTLOOK-US dollar rally likely to continue week ahead

(Fixes typo in first paragraph)

NEW YORK, Feb 8 (Reuters) - The U.S. dollar's recent rally is likely to continue in the week ahead as investors stay focused on the likelihood of lower interest rates and slowing economies in Europe.

While the big fear, based on recent economic data, has been that the U.S. economy will stall, much of that concern has already been priced into currency markets, analysts say.

Now the focus is shifting to bad news elsewhere around the world, particularly after an interest rate cut from the Bank of England, and relatively mild comments on monetary policy from European Central Bank President Jean-Claude Trichet, this week.

Those factors allowed the U.S. dollar to have its best week since June 2006 by some measures.

"The market has priced in a lot of negative news from the U.S.," said Meg Browne, senior currency strategist at Brown Brothers Harriman. "But reading the ECB there has been a slight shift away from their hawkish stance with a focus more on growth, and the market is now trying to figure out when the ECB cut will be."

The European Central Bank left benchmark borrowing costs unchanged at 4.0 percent on Thursday, but ECB President Jean-Claude Trichet said euro zone economic growth risks are to the downside, signaling lower interest rates this year. Trichet made his comments in a post-meeting press conference on Thursday.

The euro fell 2.1 percent against the dollar EUR= for the week, it's worst week since June 2006.

"We have seen a basic change (from the ECB) and this is what the market has been waiting for," said Joe Trevisani, chief market analyst at FX Solutions in Saddle River, New Jersey.

The U.S. dollar gained 0.8 percent for the week against the yen JPY=, it's best week since mid December. The New York Board of Trade's U.S. dollar index .DXY, measuring the dollar against a basket of currencies, gained 1.6 percent in the last five trading sessions, its best week since June 2006.

The Bank of England cut its key interest rate on Thursday by a quarter percentage point to 5.25 percent, as widely expected, in an attempt to shore up the British economy in the face of the global credit squeeze.

The cut followed a similar move in December and sterling fell 0.9 percent against the dollar for the week.

The BoE's move follows cuts from the Federal Reserve of 1.25 percentage points over the past month as U.S. data has increasingly pointed to a recession. The U.S. Federal Reserve has now slashed rates by 2.25 percentage points since last September, and is seen cutting rates at least another 0.75 percentage point by the end of the year.

Going into the weekend, investors will also be looking to any currency-related comments from the meeting of Group of Seven finance ministers and central bankers in Tokyo though no dramatic statements are expected.

"There will be no change in the statement," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon.

Despite the overall outlook for the U.S. dollar, a slew of first tier data could cause some market volatility in the week ahead.