FOREX-Euro drops as German investor morale darkens, Swiss franc nears 2019 high

* Euro falls, hurt by weak ZEW survey reading
* Swiss franc soars towards new 2019 high vs euro
* Sterling back below $1.25, hits new 6-month low vs euro
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds details, quote, updates with latest prices)
By Tommy Wilkes
LONDON, July 16 (Reuters) - The euro fell on Tuesday after
signs of deteriorating sentiment among German investors,
although the prospect of more central bank easing - starting
with the Federal Reserve later this month - meant another day of
small, contained currency moves.
Foreign exchange markets have been notably quiet in recent
weeks, with investors sitting on the sidelines before central
bank meetings this month.
Volatility in currency markets has plummeted, according to
the Deutsche Bank Currency Volatility Index .DBCVIX .
The ZEW economic sentiment survey in Germany deteriorated
more sharply than expected in July, with the ZEW institute
pointing to the unresolved trade dispute between China and the
United States as well as political tensions with Iran.
The euro weakened 0.2% to $1.1239 EUR=EBS .
The Swiss franc, which as a perceived safe haven has
benefited from concerns about the euro zone economy, rose 0.2%
to 1.1059 francs per euro EURCHF=EBS , a one-month high and not
far from two-year highs of 1.1057 touched in June.
"Germany was the biggest winner among major economies from
China's emergence as an economic superpower and is the most
vulnerable to its slowdown. And as Germany slows, so it takes
the euro zone with it," said Kit Juckes, strategist at Societe
Generale.
The dollar index was up 0.2% to 97.099 .DXY , a fair way
from its June lows of 95.843.
Markets expect the Federal Reserve to cut rates later in
July, but the dollar has held its own as expectations grow for
other central banks to follow suit.
U.S. retail sales numbers for June arrive later on Tuesday
and investors will be looking to see whether such data support a
rate cut of 25 or 50 basis points.
Commerzbank analysts said they expected the dollar
exchange-rate reaction to the U.S. data to be modest. It would
only strengthen once Fed officials confirmed its direction, they
said.
Sterling was back on the ropes, skidding below $1.25
GBP=D3 and hitting a new six-month low versus the euro of
90.25 pence EURGBP=D3 after the two men vying to be Britain's
next prime minister were seen to be toughening their line on
Brexit negotiations.
Investors are worried about the rising risk of a no-deal
exit from the European Union.
The yen dropped 0.1% to 108.05 yen JPY= per dollar.
The yen, a safe haven, has often depreciated when investor
appetite for buying riskier assets such as U.S. equities has
improved.
But the correlation has weakened in the face of falling U.S.
yields. The 10-year Treasury yield US10YT=RR had declined to
near three-year lows this month in anticipation of Fed cuts.
The New Zealand dollar NZD=D3 rose 0.2% to $0.6729, pushed
higher by a strong inflation reading. (Editing by Angus MacSwan and Ed Osmond)