There were heavy flows reported inovernight trade and most were in one direction, selling EUR. Real money playerswere particularly active; with EUR/AUD and EUR/JPY the two stand-outs but flowsseen across the board in pairs like EUR/GBP and EUR/NZD.

The responsible thing to do from an assetmanager perspective, given even a remote possibility of contagion in Europe, isto reduce their exposure to EZ assets. That is what we are currently witnessingand this is leading to large flows in the EUR crosses.

EUR/JPY has an obvious short-term target at118.70 and below there is a 38.2% Fibo at 117.20. I expect these levels to be testedthis week. Resistance should be firm starting near 121.60.

USD/JPY has re-tested the lows from lastMonday at 93.50 and they have held for now. I remain firmly in rally-selling modeand I feel any rallies back toward 95.00 will meet with more waves of sellingfrom longer-term long positions. Intraday resistance levels start to strengthennear 94.60/80.

EUR/USD has again stalled near 1.2850,although marginal new lows were made last night, but I feel the close below theprevious pivot at 1.2870 is an important technical event. No point in trying topick the bottom of this move I feel, and selling rallies is the safer play.

The AUD/USD is pretty much unchanged withlarge flows netting each other out. Real money players were notable sellers ofEUR/AUD and hedge funds were again seen selling AUD/USD at 1.0475/80 (just likethey did a few weeks ago). AUD/JPY is still trading inside its recent channelbetween 97.20/100.00 but if global risk-aversion escalates, we can expect tosee a bearish break here.

Cable was capped by very solid sellinginterest above 1.5250 and as this was a previous weekly low, it is now veryimportant as a resistance level. EUR/GBP fell heavily as the market exits EURpositions across the board. Next support in the cross is a daily low near .8440.

Good luck today.