* German industrial orders data pushes euro higher
* Gains seen temporary as ECB ready to lower rates
* Australian dollar drops after RBA cuts cash rate
By Anirban Nag
LONDON, May 7 (Reuters) - The euro rose on Tuesday after German industrial orders beat forecasts, though expectations the European Central Bank could ease monetary policy further were seen likely to limit gains.
The euro hit a session high of $1.3123, up from $1.3077 just before the data. Industrial orders for March rose 2.2 percent from February, beating a forecast of a 0.5 percent drop and providing some relief to the single currency.
The euro had fallen after ECB President Mario Draghi said on Monday the bank would monitor incoming euro zone data closely and be ready to cut rates further, including the deposit rate currently at zero.
"We don't think the euro's gains will last," said Alvin Tan, currency strategist at Societe Generale. "The German data saw the euro spike, but in the grand scheme of things the euro zone economy has been lagging, especially the U.S. Anything above $1.32 is a sell."
In the options market, one-month implied volatilities were near their lowest since January, indicating the euro was likely to stay in a range against the dollar. The euro has been trading between $1.2740 and $1.3243 since March.
Support for the euro is seen around $1.3024, the 76.4 percent retracement of its April 24-May 1 rally and the 55-day moving average at $1.3021. Traders also cited bids from Asian sovereign accounts at sub-$1.3050 levels.
The euro regained ground against the yen, up 0.2 percent at 130.23 yen but still some way off a three-year high of 131.10 set last month. The dollar was flat at 99.25 yen with some hedge funds buying the U.S. currency.
The Australian dollar hit a two-month low after the central bank cut rates to a record low and highlighted the currency's strength. The market had been divided on the chances of a cut, but prospects of further loosening could weigh on the currency.
The growth-linked Australian dollar fell to $1.0165, down 0.7 percent on the day.
"The market has clearly taken the RBA rate cut as signalling not just a shift in timing, but also that ultimately rates will fall further than was previously thought and that is being negative for the Aussie," said Adam Cole, global head of FX strategy at RBC Capital Markets.
"For us, however, it is more an issue of timing and we don't expect the Aussie to fall much from here ... it will likely form a base around $1.02."