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The Fed stunned markets by going bullish on jobs. It also didn’t seem extremely worried about inflation. The hawkishness of the statement is reflected in the dissent: it was a dovish one this time. The dollar surged higher and it isn’t necessarily the end.

EUR/USD fell from the highs it climbed to oh-so-gradually and as  Valeria Bednarik of FXStreet said on air, it is forming a Head and Shoulders formation. On the way, it lost support at 1.2660 – a line that was key many times in recent trading. Here is how it looks on the 4 hour chart:

EURUSD Head and Shoulders after Fed ends QE October 29 2014 euro dollar forex pattern

As she said, a  text book H&S pattern is one that comes after a  bullish run, and this formation comes after a bearish one. However, it looks quite nice on the chart, with 1.2620 serving as the neckline, 1.2750 as the shoulder line and 1.2850 as the head line.

So, 1.2620 is the level to watch. Below, we have 1.2570 and the all important 1.25 level, which is where the pair bounced from in early October.

More:  Did US Treasury Secretary Lew hint of a strong GDP number