By Wayne Cole

SYDNEY, June 27 (Reuters) - The Australian and New Zealand dollars hovered near multi-month highs on Friday having made a remarkable turnaround from deep lows hit early in the week as risk appetite recovered and their U.S. counterpart came under pressure.

The Aussie was up at $0.6542 AUD=D3, having risen 0.5% overnight to a seven-month top of $0.6564. That was a resounding comeback from a trough of $0.6373 touched on Monday when concerns over the Iran-Israel conflict were rocking markets.

The next bull target is a $0.6687 top from last November, with support at $0.6542 and $0.6456.

The kiwi dollar firmed to $0.6065 NZD=D3, after gaining 0.3% on Thursday to reach $0.6074. That was a whisker from the recent eight-month top of $0.6088 and a world away from the low of $0.5883 struck early in the week.

The rally also defied growing expectations the Reserve Bank of Australia will cut rates at its policy meeting on July 8, following a surprisingly soft inflation reading for May.

Markets imply around a 90% chance of a quarter-point easing to 3.60%, and historically it is rare for the RBA not to move when markets are so heavily priced for one. 0#AUDIRPR

Among the major local banks, Westpac and CBA this week joined NAB in tipping a July cut, with only ANZ sticking to an August call.

JPMorgan, HSBC, Goldman Sachs, TD Securities, Nomura and Capital Economics are forecasting a July move, with the only differences about where rates will bottom.

"We continue to expect the RBA to cut 25bps in July, August, and November to a terminal rate of 3.1%, with risks skewed to a faster and deeper easing cycle," said Andrew Boak, an economist at Goldman.

Markets are now favouring 2.85% as the floor, though much depends on where the RBA sees neutral - the rate which is neither a drag nor a stimulus to the economy.

That used to be around 3.5%, but the central bank has indicated it might be lower while emphasising that different models produced very different outcomes. Estimates range from as low as 0.5% up to almost 4.0%, with an average around 3.0%.

"There are growing signs that Australia's economic recovery is struggling for momentum," said Abhijit Surya, a senior economist at Capital Economics.

"Accordingly, we've brought forward our forecast for the Bank's next 25bp cut from August to July and lowered our forecast for the terminal rate from 3.35% to 2.85%."

(Reporting by Wayne Cole; Editing by Sonali Paul)

((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))