* Euro rallies after court confirms no delay to ESM ruling * Strong resistance around 200-day moving average at $1.2834 * Speculation of Fed easing weighs broadly on dollar By Nia Williams LONDON, Sept 11 (Reuters) - The euro hit a near four-month high against the dollar on Tuesday on expectations a German court will back the euro zone bailout fund and speculation the U.S. Federal Reserve will ease monetary policy further. Gains were seen likely to be capped by the outside risk Germany's constitutional court could still surprise investors by rejecting the European Stability Mechanism in a ruling on Wednesday. Such a decision would threaten European Central Bank plans to lower the borrowing costs of Spain and Italy -- plans that helped lift the euro last week. The euro climbed 0.5 percent on the day to a peak of $1.28197, its highest since May, but faced tough resistance at the 200-day moving average around $1.2834. It rallied after the German court said it would not postpone Wednesday's long-awaited decision despite a new challenge by a eurosceptic lawmaker. "There's been a burst of optimism on the announcement the ruling will not be delayed, but this move looks a bit extreme on the basis it's just confirmation it will be delivered on time," said Michael Sneyd, FX strategist at BNP Paribas. "This is people putting on positions ahead of events this week. We may have a few days of volatile ranges as investors stretch between optimism and concerns the moves have been overdone." As well as the court ruling, the Netherlands holds an election on Wednesday, while a two-day U.S. Federal Reserve meeting ends on Thursday. Poor U.S jobs data last week raised expectations the Fed will launch another asset purchase programme, a move that would weigh on the dollar against higher-yielding currencies. "As long as there are expectations of quantitative easing by the Fed, the euro is likely to have some support," said a senior trader at a European brokerage. In a Reuters poll taken after Friday's payrolls report, economists saw a 60 percent chance of the Fed embarking on QE3 this week compared with 45 percent in a late August poll. As a result, the dollar index DXY> fell to a four-month low of 80.122, while the greenback also slipped to a three-month trough against the Swiss franc of 0.94154 francs. The dollar traded at 78.17 yen, down 0.1 percent on the day and near a five-week low of 78.02 yen hit on Friday. THORNY PATH Analysts said sentiment toward the euro was broadly positive but it would remain vulnerable to developments in Spain, which is expected to ask for a bailout, and Greece, whose foreign lenders rejected parts of a government austerity package. Spanish Prime Minister Mariano Rajoy said late on Monday that he expected the European Union to set reasonable conditions for Spain if the country sought a bailout but added no decision on a bailout would be taken before a Sept. 14-15 meetings of euro zone and EU finance ministers. "If Spain asks for help, it will have to tighten fiscal policy and carry out structural reforms. That would be a thorny path which could even cause social unrest at worst as we know from Greece's experience," said Makoto Noji, senior strategist at SMBC Nikko Securities. Greece said on Monday it was struggling to persuade foreign lenders to accept a plan to save nearly 12 billion euros over two years, vital to unlocking aid payments..

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