The US decision to move its embassy to Jerusalem has damaged President Donald Trump's push for what he calls the "ultimate deal" -- a lasting peace agreement between Israel and the Palestinians.
Here is a look at the state of talks between the two sides:
What are the negotiations over?
Seventy years after the creation of Israel, peace with the Palestinians remains elusive. Israel has occupied Palestinian territory since 1967 and the Jewish state has fought three wars with Palestinian militants in Gaza since 2008.
Decades of diplomatic efforts have failed to find a solution to one of the world's longest-running conflicts.
How are talks going?
In short, they aren't. There have been no formal peace talks since 2014, following the collapse of efforts by the previous US administration to broker a deal. Since then the two sides have discussed new talks multiple times but have never agreed.
Palestinian president Mahmud Abbas accuses Israel of failing to fulfil previous promises, while Israel says Abbas is not ready to make the tough choices needed for peace.
What are the issues?
The toughest issues remain the same as they have been for decades -- settlements, refugees and Jerusalem.
Israel has occupied the Palestinian territories for more than 50 years, building homes for more than 600,000 Israelis in the West Bank and east Jerusalem. Such settlements are considered illegal under international law.
The Palestinian government exercises limited self-government in Palestinian cities in the West Bank.
Millions of Palestinian refugees live in Gaza, the West Bank and countries surrounding Israel and demand the right to return to the land their families fled from during the war surrounding Israel's creation.
Israel rejects this so-called right of return out of hand, saying it would mean the end of the Jewish state.
Both the Palestinians and Israelis see Jerusalem, holy to Jews, Christians and Muslims, as their capital.
Israel seized control of east Jerusalem in a 1967 war, but its control over the area and its mostly Palestinian population is considered illegal under international law.
In December Trump declared Jerusalem as Israel's capital and announced the embassy move, prompting the Palestinians to cut ties with his administration.
What is Trump's plan?
Nothing has been released yet officially but indications are that Trump's plan will be more favourable to Israel than previous peace proposals by US administrations.
The White House has yet to commit itself to the two-state solution and Trump's ambassador to Israel has been a supporter of settlements.
Abbas continues to refuse to talk with the Trump administration and has said the US can no longer be the sole mediator between Israel and the Palestinians.
Relations are close to rock bottom -- Abbas recently called Trump's ambassador to Israel a "son of a dog".
Israeli Prime Minister Benjamin Netanyahu has accused Abbas of walking away from a chance for peace, but has focused more heavily on the threat of Iran when addressing American officials.
Jerusalem's al-Aqsa mosque compound, known to Jews as the Temple Mount and seen here on December 29, 2017, is at the heart of the Israeli-Palestinian conflict