Israel captured east Jerusalem in the 1967 Middle East war and annexed it in a move not recognised internationally. The Palestinians want east Jerusalem as the capital of a future state, and view the relocation of the embassy from Tel Aviv to the contested city as a one-sided move that invalidates the US as a Middle East peace broker.

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Trump's decision in December to recognise Jerusalem as Israel's capital ignited months of protests in the Palestinian territories. The weekly protests along the Israel-Gaza border are expected to culminate on Monday in parallel with the celebrations in Jerusalem.

Since March 30, 42 Palestinians have been killed by Israeli fire in the weekly protests held primarily to highlight the decade-long blockade of Gaza. More than 1800 have been wounded.

Gaza's Hamas rulers have led the protests, which are set to peak this week with the 70th anniversary of what the Palestinians call the "nakba," or catastrophe, referring to their mass uprooting that followed Israel's 1948 creation. Organisers have indicated they may try to breach the border with Israel.

Israel says it has a right to defend its border and has accused Hamas of using the protests as a cover for attacking it. On Saturday, it destroyed the sixth Hamas attack tunnel it has uncovered in as many months. Rights groups say the use of potentially lethal force against unarmed protesters is unlawful.

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A high-ranking delegation of Gaza's Hamas rulers headed to Egypt on Sunday, amid diplomatic efforts aimed at containing the mass rally.

Isareli Prime Minister Benjamin Netanyahu, meanwhile, said his country would be celebrating Trump's decision.

"President Trump promised to recognise Jerusalem as the capital of Israel and he did so. He promised to move the American Embassy to Israel and he is doing so. Of course we will all celebrate this day, a real celebration," he said at a weekly Cabinet meeting.

Most countries have traditionally kept their embassies in coastal Tel Aviv rather than the contested holy site of Jerusalem, but after Trump's move both Guatemala and Paraguay announced that they planned to follow suit.

AAP