We investigate the phase coherence of a trapped Bose–Einstein condensate that undergoes a dynamical superfluid–insulator transition in the presence of a one-dimensional optical lattice. We study the evolution of the condensate after a sudden displacement of the harmonic trapping potential by solving the Gross–Pitaevskii equation, and comparing the results with the prediction of two effective 1D models. We show that, owing to the 3D nature of the system, the breakdown of the superfluid current above a critical displacement is not associated with a sharp transition, but there exists a range of displacements for which the condensate can recover a certain degree of coherence. We also discuss the implications on the interference pattern after the ballistic expansion as measured in recent experiments at LENS.