* Yen, dollar soften as investors cautiously chase risk
* U.S. data beats expectations but enthusiasm limited
* Euro flat after weak German ZEW sentiment
* Goldman earnings beat expectations, more banks on tap (Updates prices, adds details, Canadian dollar)
By Steven C. Johnson
NEW YORK, July 14 (Reuters) - The yen slipped on Tuesday in choppy trade while the dollar struggled against most major currencies as Goldman Sachs' earnings and U.S. retail sales surpassed expectations, stoking modest hopes for an economic recovery.
But traders were cautious ahead of earnings news from other U.S. banks while lackluster data from Germany weighed on the euro, keeping it rooted in a broad range against the dollar.
A rise in risk appetite boosted higher-yielding currencies and those tied to commodity prices such as Canada's dollar, which hit a three-week high against the greenback.
The U.S. dollar and yen tend to fall when risk appetite rises as investors target higher-yielding currencies and assets such as stocks and commodities.
"Retail sales were better than expected, so that's a bit of good news, but there has been little follow-through as the market is uncertain which way it wants to trade," said Greg Salvaggio, vice president of trading at Tempus Consulting in Washington.
The data came with some caveats as traders noted much of the 0.6 percent gain in retail sales was distorted by higher gasoline prices.
Salvaggio also said data showing a sharp rise in U.S. producer prices last month, which pushed government bond yields up, may stoke inflation fears.
Given the current thin summer trading conditions, he said it adds up to a euro stuck in a broad $1.3850-$1.4050 range.
In midday trading in New York, the euro was flat at $1.3975 and up 0.2 percent at 130.11 yen. The dollar rose 0.2 percent to 93.12 yen.
Currencies seen as higher risk did better as the Canadian dollar rose more than 1 percent to a three-week high of C$1.1353 per U.S. dollar.
Australia's dollar rose 0.8 percent to $0.7893, and sterling added 0.4 percent to $1.6298. Strong Australian business confidence data and better-than-expected UK retail sales and home price data added to demand for both.
The euro's woes were tied partly to a monthly poll of economic sentiment from German think-tank ZEW, which defied upbeat market expectations and fell for the first time since October.
"The stabilization of the German economy is under way, but it will not be as strong as latest data could make us believe," said Carsten Brzeski, economist at ING Financial Markets.
Analysts at Calyon wrote in a research note that global "economic data still seems like two steps forward and one step back in the march toward a permanent upturn, and as such, currencies are likely to remain jumpy for quite some time."
A 33 percent rise in Goldman Sachs' quarterly earnings also lifted some spirits, though market participants remained cautious ahead of reports this week from other banks, including Citigroup and JPMorgan Chase.
Also on the radar on Tuesday is the Bank of Japan's two-day policy meeting. Officials are expected to hold rates at 0.1 percent but may extend measures to support corporate finance.
In Japan, new Vice Finance Minister Yasutaka Tango said he hoped the Bank of Japan would keep conducting monetary policy in close cooperation with the government.