In typical UNIX fashion, read(2) returns 0 bytes to indicate end-of-file which can mean:
- There are no more bytes in a file
- The other end of a socket has shutdown the connection
- The writer has closed a pipe
In your case, fifo.read() is returning an empty string, because the writer has closed its file descriptor. 
You should detect that case and break out of your loop:
reader.py:
import os
import errno
FIFO = 'mypipe'
try:
    os.mkfifo(FIFO)
except OSError as oe: 
    if oe.errno != errno.EEXIST:
        raise
print("Opening FIFO...")
with open(FIFO) as fifo:
    print("FIFO opened")
    while True:
        data = fifo.read()
        if len(data) == 0:
            print("Writer closed")
            break
        print('Read: "{0}"'.format(data))
Example session
Terminal 1:
$ python reader.py 
Opening FIFO...
<blocks>
Terminal 2:
$ echo -n 'hello' > mypipe 
Terminal 1:
FIFO opened
Read: "hello"
Writer closed
$ 
Update 1 - Continuously re-open
You indicate that you want to keep listening for writes on the pipe, presumably even after a writer has closed.
To do this efficiently, you can (and should) take advantage of the fact that
Normally, opening the FIFO blocks until the other end is opened also.
Here, I add another loop around open and the read loop. This way, once the pipe is closed, the code will attempt to re-open it, which will block until another writer opens the pipe:
import os
import errno
FIFO = 'mypipe'
try:
    os.mkfifo(FIFO)
except OSError as oe:
    if oe.errno != errno.EEXIST:
        raise
while True:
    print("Opening FIFO...")
    with open(FIFO) as fifo:
        print("FIFO opened")
        while True:
            data = fifo.read()
            if len(data) == 0:
                print("Writer closed")
                break
            print('Read: "{0}"'.format(data))
Terminal 1:
$ python reader.py 
Opening FIFO...
<blocks>
Terminal 2:
$ echo -n 'hello' > mypipe 
Terminal 1:
FIFO opened
Read: "hello"
Writer closed
Opening FIFO...
<blocks>
Terminal 2:
$ echo -n 'hello' > mypipe 
Terminal 1:
FIFO opened
Read: "hello"
Writer closed
Opening FIFO...
<blocks>
... and so on.
You can learn more by reading the man page for pipes: