It's amazing what some time away from the screens can do for your clarity and confidence. This update will be rather brief as I am headed up to the CNBC studios for a 12:40 p.m. ET interview on Power Lunch. Nothing like jumping right back into the mix after a break on national TV.

The last update I gave you placed EUR/USD in some kind of 4th wave formation with a floor around 1.3862. As expected, EUR/USD traded higher to an overnight high of 1.4362, but has since backed off to current levels of 1.4242. Israeli and Palestinian conflict has heightened Middle Eastern tensions sending safe haven commodities, such as gold and oil, higher. Gold has threatened daily trendline resistance at $880/oz and only a close above this level would constitute a technical breakout. Crude oil traded to a $42.15/bbl high in a highly corrective manner and has since backed off to current levels of $38.40/bbl.

EUR/USD, in response to higher commodities, gave us that push higher form the 1.3862 floor. But as I said last Monday, we are still in a wave 4 holding pattern that must further mature before a wave 5 break to the topside can develop. Any EUR/USD longs should be tightly followed by trailing stops.

On a longer time horizon, I am also watching the euro against the Sterling, which is fast approaching parity. It will be quite amazing to see EUR/USD and GBP/USD trading at the exact same rate. Should profit taking set in once a euro trades for a pound, EUR/USD will have difficulty advancing much beyond 1.5000.

It's important to keep in mind that we still in a highly illiquid and under-participated trading environment just ahead of the calendar turn. These moves need to taken with a grain of salt. Once the trade desks are fully staffed and volume returns, we should expect the market relationships seen in 3Q and early 4Q to return. This means deflationary forces pushing US treasuries higher, commodities lower, and the dollar back down to the 1.2330 level against euro.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

Disclaimer
The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.