Euro hovers near two-year lows versus dollar

The euro hovered around two-year lows versus the dollar today as investors held on to see if a court in Germany would approve the eurozone using its bailout fund in order to contain the debt crisis in the region.

The single currency was trading at $1.2253, with the EBS two-year low on Monday of $1.2225 in sight, paving the way to test support of $1.20. If that level is hit, the pair could edge towards $1.1875, the low hit in June.

The German Constitutional Court started a hearing on whether the region’s bailout fund and changes to budget rules in the bloc are in accordance with German law. Wolfgang Schaeuble, the German finance minister, said that any significant delay in the EU’s permanent bailout fund being approved could result in further market turmoil and weaken confidence in the eurozone.

The latest meeting of the region’s finance ministers earlier in the week was unable to provide much reassurance. Although ministers agreed to give Spain an additional year, to 2014, to hit its deficit reduction targets, a final figure was not agreed on to aid the country’s embattled banks. They have said that 30bn euros will be available before the end of July.