Ask around to see if anyone's lost any money, but don't tell them the exact amount. If anyone claims they did, ask how much. If they say $120 Euros, give it to them.
If no one claims it, post something on the bulletin board saying you found some money, and how to get in contact with you if they lost it.
If after a day you still haven't had anyone claim it, turn it in to the hostel and hope for the best.
Alternatively, if no one claims it in a few days, pick a good charity and donate it.
I just found 120 Euro (about $172) on the floor in the hallway in a hostel in Berlin. What should I do, and why?