* Euro rises on strong German industrial output data
* Follows upbeat German data on Tuesday
* Tempers rate cut prospects, but gains seen limited
* Australian dollar up on China data, NZ dollar slides
By Jessica Mortimer
LONDON, May 8 (Reuters) - The euro rose against the dollar on Wednesday after an unexpected rise in German industrial output was seen making a near-term euro zone interest rate cut less likely.
However, analysts were wary about how much the euro could rise given that other recent data from Europe’s largest economy has been much gloomier.
The euro rose 0.5 percent to a session high of $1.3148 after industrial output rose 1.2 percent during March, against forecasts for a 0.1 percent fall.. It followed surprisingly strong industrial orders on Tuesday.
“Positive German industrial production data clearly questions whether there is space for another euro zone rate cut right now,” said Simon Derrick, head of currency strategy at Bank of New York Mellon.
Traders reported stop-loss euro buy orders at $1.3150 which, if triggered, could push the euro through resistance at $1.3156, the 100-day moving average, and towards the $1.3243 May peak.
Falling borrowing costs in peripheral euro zone countries have also lifted the euro lately. One-month implied volatilities in euro/dollar remain near their lowest since January, suggesting investors are reluctant to bet on sharp euro falls.
But the euro remained vulnerable to data given that a fragile euro zone economy has prompted the European Central Bank to hint at negative deposit rates.
“Euro/dollar is likely to trade sideways for now, with a risk to the downside,” said Niels Christensen, currency strategist at Nordea in Copenhagen.
The Australian dollar was up 0.1 percent at $1.0195 , gaining after upbeat Chinese trade data due to the two countries’ strong trade links.
The Aussie hit a two-month low of $1.0155 after the central bank (RBA) cut interest rates on Tuesday and warned more could follow.
“This dovish (RBA) outlook should see a probe of $1.00-1.01 near term,” Westpac analysts said in a note to clients.
The dollar fell 0.2 percent against a basket of currencies to 82.070 and was flat at 99.00 yen.
The New Zealand dollar underperformed other major currencies after the country’s central bank said it had intervened to try to restrain the strength of the currency.
The New Zealand dollar was down 0.7 percent at $0.8397 , although analysts and traders were sceptical about how much lasting impact intervention could have.