* Dollar index rises to highest level in about 3 months
* New Zealand dollar bounces on PM comments
* Euro up after touching lowest in nearly 2 months
* Aussie hits fresh 6-yr low, hurt by gold's slide (Recasts with kiwi move, changes dateline from previous SINGAPORE)
By Patrick Graham
LONDON, July 20 (Reuters) - The New Zealand dollar was the main mover on major currency markets on Monday, pushing higher after the country's prime minister expressed caution about the scale of the currency's recent fall.
The kiwi and the Australian dollar had been among the worst hit on Friday and in Asian trade on Monday, when solidifying expectations of a rise in U.S. interest rates this year drove the dollar to a three-month high against a basket of currencies. .DXY
Analysts expect the Reserve Bank of New Zealand to cut interest rates this week. A 4 percent slump in gold prices added to the pain for currencies that tend to track prices of commodities.
But traders said the kiwi had recovered some ground after New Zealand Prime Minister John Key said the currency's 25 percent fall over the last year had been faster than expected. By 0740 GMT it was 1.1 percent higher at $0.6582, having earlier neared last week's six-year low of $0.6498.
"All of the commodity currencies are taking a hammering from the dollar's rise and in the broader scheme of things this is a small retracement," said a dealer with one international bank in London. "There should be more pressure to come, but it certainly suggests the central bank may not be overly gung ho this week."
Solid U.S. inflation and housing data helped the U.S. dollar to its best weekly performance in about two months last week after Federal Reserve Chair Janet Yellen reiterated that U.S. interest rates will probably be lifted later in the year.
At 97.769 in morning trade in Europe, the dollar was just 0.1 percent off a three-month high of 98.061 hit overnight against a basket of currencies.
It was roughly steady at 124.13 yen JPY= and down 0.3 percent against the euro at 1.0861 EUR=EBS
Yen-related trading activity was thinner than usual with financial markets in Tokyo closed on Monday for a public holiday.
The euro has struggled even though worries about Greece exiting the euro zone have waned, at least for the time being, after Athens agreed to a debt deal with its creditors last week.
"The euro's direction is probably still toward the downside," said Teppei Ino, an analyst for global markets research for Bank of Tokyo-Mitsubishi UFJ in Singapore.
In the short term, however, the market may lack fresh incentives to sell the euro further, especially with Yellen's congressional testimony out of the way, Ino said.
Greek banks are ready to open their branches across the country on Monday after a three-week shutdown, officials said, while German Chancellor Angela Merkel called for swift aid talks so Athens could also lift withdrawal limits. ID:nL1N0ZZ0FN