* 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 top estimates, with more banks on tap
(Adds comments, details. Updates prices, changes byline)
By Vivianne Rodrigues
NEW YORK, July 14 (Reuters) - The yen fell on Tuesday while the dollar struggled against most major currencies as Goldman Sachs Group's earnings and June U.S. retail sales surpassed expectations, stoking modest hopes for an economic recovery and boosting investors' appetite for higher-yielding assets.
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.
The slight rise in risk appetite gave support to 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 afternoon trading in New York, the euro was 0.3 percent lower at $1.3937 and nearly flat at 129.87 yen.
The dollar rose 0.3 percent to 93.19 yen.
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 Inc and JPMorgan Chase & Co.
"The focus will remain for now on corporate earnings, with U.S. equities likely to be the biggest factor weighing on the greenback." said Michael Woolfolk, senior currency strategist at The Bank of New York Mellon.
"If earnings disappoint, as many suspect, the dollar has room to rally on rising risk aversion and falling stock prices," he added. "If earnings exceed expectations, the dollar may come under renewed selling pressure."
HIGH-YIELDERS
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 0.6 percent to $0.7879, and sterling added 0.3 percent to $1.6270. 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."