About a mile from the embassy building, the Palestinian neighbourhood of Jabal Mukaber was peaceful although it has seen violent confrontations between its inhabitants and Israeli security forces in the past.
Moving the embassy from Tel Aviv "is not going to affect the lives of residents, but it will have a political impact because it will strengthen Israel and incite intolerance," neighbourhood leader Hussein Iwesiat told AFP.
"The (Israeli) occupation will be encouraged to become more violent," he said.
For Palestinians, the order given by President Donald Trump to break with decades of US policy, recognise Jerusalem as the capital of Israel and move the embassy there is deeply provocative.
In east Jerusalem's walled Old City all was quiet on Monday and shops were open as usual, but there was frustration beneath the calm surface.
"I feel insulted as an Arab, humiliated by everything that happens," shopworker Ali Jaber, 53, said.
"But what can we do?"
Sitting amid the colourful clothes in her shop in an Old City bazaar, 32-year-old Nihad Abu Sneineh said she does not believe that demonstrations are the answer.
"If there is ever mass protest the Israeli police will not be handing out gifts," she said.
"They will beat the demonstrators and put them in prison," she added. "They even put children in prison."
Working in a shop across the alley, Hamed, 25, said that Israeli joy over the move could actually reflect anxiety.
"When a house does not belong to you, you feel obliged to tell everyone that it's really yours," he said.
Embassy 'strengthens security'
Just beyond the Old City walls in the commercial downtown of west Jerusalem, Israeli and US flags flutter in the breeze.
Elisa Rake, a 31-year-old mother of two and a Parisian immigrant to Israel who has lived in the divided holy city for 12 years, has mixed feelings about Trump's decision.
"It's a special day, but I would have preferred the embassy to be moved by a guy who is not a homophobic racist," she said.
But she does not fear violent protest as a consequence.
"The presence of this embassy in Jerusalem can only strengthen security," she said.
Nearby, people sit in the sunshine at cafe terraces or stroll between the shops.
"I am sceptical about the future but American support for Israel is important," said Yaakov Cohen, who immigrated to Israel from the United States 25 years ago.
"If words have meaning then actions have even more, so maybe it's a historic day," he said.
Avraham Binyamin has been selling the kippa skullcaps worn by observant Jews for 37 years.
His merchandise, directed in part at Jewish tourists, includes items bearing the slogan "Trump, Make America Great Again" and portraits of the US president.
"Some worship him, others hate him," said Binyamin, 57.
"Nobody's indifferent, the same goes for his decision," he added.
A neighbouring cold-drink seller looks up from the book of psalms he is reading and points heavenward.
"It is not Trump who decides," he says. "It is only God".
