EUR/USD climbed to 1.650 yesterday before reversing after the US Treasury announcement. The initial rally was driven by a sizeable 7-8bp tightening in EUR/USD two-year swap differentials, entirely the result of an almost lObp rise in the euro leg. That likely reflected spillover from another rise in energy prices and perhaps some positioning for a hawkish ECB message today.There are some downside risks for the euro today. Markets now price 50bp of tightening by year-end and 85bp by July, leaving the ECB with a high bar to meet. While today’s widely expected 25bp hike can still be framed as an insurance move, further hikes would push policy further into restrictive territory. We doubt the ECB is ready to semi-commit to another hike by year-end, as it did in July, for two main reasons: a) the inflation projections are unlikely to justify it; b) concerns may be building around the eurozone bond market.To be clear, we don’t think the ECB will be intentionally dovish. But retaining broad optionally on further tightening seems too little to satisfy markets’ hawkish bets. We expect some repricing lower in the EUR curve to pave the way for a retest of 1.160 ahead of next week’s FOMC (where we expect a hike). Our one-month target remains 1.150.