Pause or hike is the question today for everyone who watches the ECB, but how the decision turns the negative tide for EUR/USD is unclear. An increase in the depo rate to 4% would be understandable if inflation is revised up but would not do growth any favours. This would reinforce the growth differentials between the US and EU that buttressed the Dollar bounce this summer. 

A pause at 3.75% keeps the spread at 175 bps in favour of the Dollar. 

A reference to faster QT (to boost real yields) would be a surprise and should give the Euro a lift as it steepens the Bund and swap curves. 

If there is truth to the Reuters story that the central bank still now sees inflation averaging over 3% next year instead of nailed on 3%, then a rate increase today should not come as a shock.