* U.S. data beats expectations but enthusiasm limited
* Yen, dollar soften as investors cautiously chase risk
* Euro struggles after weak German ZEW sentiment
* Goldman earnings beat expectations, more banks on tap (Recasts, updates prices, adds comment, detail)
By Steven C. Johnson
NEW YORK, July 14 (Reuters) - The yen fell broadly on Tuesday while the dollar also struggled against most currencies as Goldman Sachs' earnings and U.S. retail sales data 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 slight rise in risk aversion also boosted higher-yielding currencies such as the Australian dollar at the expense of both the yen and U.S. dollar, which tend to see their biggest gains when investors grow anxious and buy them as safe havens.
"Retail sales were better than expected, so that's a bit of good news, but there's 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, though, as traders noted much of the 0.6 percent gain in retail sales was distorted by higher gas 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 $1.3850-$!.4050 range.
Midmorning in New York, the euro was flat at $1.3977 and up 0.1 percent at 130.04 yen. The dollar rose 0.1 percent to 93.08 yen.
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.
Currencies considered higher risk, however, did better. Australia's dollar rose 0.8 percent to $0.7890, and sterling added 0.4 percent to $1.6299. Strong Australian business confidence data and better-than-expected UK retail sales and home price data added to demand for both.
Separate United Kingdom data showed inflation below the Bank of England's 2 percent target in June, while incoming monetary policy committee member Adam Posen said the central bank had not ended quantitative easing.
But 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 Group's 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. (Additional reporting by Jessica Mortimer in London; Editing by James Dalgleish)