Image Source: DepositPhotosEUR/JPY climbs to within a pip of 168.00 on Monday, its sixth day of gains in a row, as traders preference the Euro owing to the wide interest-rate differential between the Eurozone and Japan.Relatively higher interest rates in Europe, of 4.5%, compared to Japan’s 0.0% – 0.1% benefit the Euro (EUR) more than the Japanese Yen (JPY) because they lead to higher capital inflows. This in turns leads to gains for EUR/JPY. The short-term uptrend in EUR/JPY extends despite firming expectations that the European Central Bank (ECB) will cut interest rates in June, whilst the Bank of Japan (BoJ) is more likely to raise interest rates at some point before the end of 2024 – narrowing the differential. Recent data from Japan which showed weak wage growth and inflation, however, has extended the timeline for the expected rate hikes in Japan, reducing the performance of JPY.The Euro on the other hand, has gained after the release of first quarter GDP data showed a surprise increase of 0.3% in the Eurozone GDP growth rate. This was the fastest growth rate since the third quarter of 2022 and beat market expectations of a marginal 0.1% expansion. It also comes after a run of moribund readings showing anemic growth for the continent. EUR/JPY dipped temporarily to a low of 167.50 early on Monday after the BoJ reduced its last round of quantitative easing (QE). From previously buying 475 billion Yen in 5-10 year Japanese government bonds it reduced its purchases to 425B instead. A decrease in bond buying is seen as a tightening policy – similar to raising interest rates – which tends to be positive for a currency. In addition, influential member of the ruling party, Katsunobu Kato said that Japan is seeing conditions fall in place for the BoJ to normalize monetary policy, i.e raise rates. Kato added, however, that the BoJ must monitor economic conditions and coordinate carefully with the government in working out when to raise interest rates, according to Lallalit Srijandorn, FX Analyst at FXStreet.More By This Author:EUR/JPY Price Analysis: Bullish Forces Steering The Market, Minor Pullbacks Possible Oil Price Analysis: Falling In A Channel Over The Short-Term AUD/USD Price Analysis: Pausing Within New Uptrend