Trump yesterday delayed a decision on the highly contentious issue - a crucial question in the Israeli- Palestinian conflict - after public warnings from allies and private phonecalls between world leaders.
The EU, which supports a two-state solution to the conflict, warned against doing anything that would jeopardise the peace process.
"Since early this year, the European Union was clear in its expectation that there can be reflection on the consequences that any decision or unilateral action affecting Jerusalem's status could have," EU diplomatic chief Federica Mogherini's office said in a statement.
"It might have serious repercussions on public opinion in large parts of the world," it added.
"The focus should therefore remain on the efforts to restart the peace process and avoiding any action that would undermine such efforts."
Trump has yet to make his final decision, US officials have said, but he is now expected to stop short of moving the embassy to Jerusalem - though he may still recognise the city as Israel's capital.
Both Israelis and Palestinians claim Jerusalem as their capital and previous peace plans have stumbled over debates on whether, and how, to divide sovereignty or oversee holy sites.
The 28-nation EU said it would "continue to engage with both parties and its international and regional partners" to support a resumption of a meaningful peace process.
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