By refusing to move the embassy to West Jerusalem (as defined by the 1949-1967 armistice lines), the US (and the world) are saying that anything beyond the 1947 partition plan, if that much, is NOT recognized as Israeli territory – giving the Arabs hopes that they can get a return to the 1947 boundaries, or the pre-1947 boundaries (Palestine in the whole of Eretz Yisrael, Israel as a figment of zionist dreams).
It is unlikely that any terrorist would decide to launch an attack that they would not have launched otherwise. It isn’t as if Islamic terrorists have been sitting around doing nothing the last 70 years.