U.S. President Donald Trump says settlement construction is not helpful for the peace process because it reduces the territory at the heart of negotiations between Israel and the Palestinians, the daily Israel Hayom reported Friday.

In the free paper's Friday edition, Trump said he believed a peace deal was possible, but Israel must "act reasonably."

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The interview was published in Hebrew a day after Trump met with the newspaper's owner, U.S. casino magnate Sheldon Adelson, at the White House for dinner. Adelson, considered Prime Minister Benjamin Netanyahu's main political patron, donated $20 million to Trump's presidential campaign.

>> Settlements and 'the ultimate deal': Trump's surprising statement on Israel in context <<

In the interview, Trump backed away from positions he voiced during the campaign on the Israeli-Palestinian conflict, including ones in previous talks with Israel Hayom. Stances like his support for unrestricted settlement construction sparked optimism on the Israeli right and among settler supporters in the Israeli government. But on Friday, Trump took opposite positions, some of which even fall in line with those of the Obama administration.

"I want Israel to act reasonably in the peace process and that it will finally happen after so many years. And maybe there will even be a possibility of a bigger peace than just Israel and the Palestinians. I want both sides to act reasonably, and we have a good chance at that," Trump said.

"There is limited remaining territory. Every time you take land for a settlement, less territory remains. I'm not someone who believes that advancing settlements is good for peace. But we are examining a number of options."

Trump said he expected the Palestinians as well to make concessions for peace. "No deal is a good deal if it isn’t good for all sides," he said.

"We are currently in a process that has been going on for a long time. Decades. A lot of people think that it can't be done. And a lot of smart people around me claim that you can't reach an agreement. I don't agree. I think we can reach an agreement and that we need to reach an agreement."

Trump, who only a few weeks ago told Israel Hayom he hadn't forgotten his promise to move the U.S. Embassy from Tel Aviv to Jerusalem, hinted on Friday that he had changed his mind.

"I'm thinking about it. I'm learning the issue and we'll see what happens," he said. "It's not an easy decision. It's been discussed for so many years. No one wants to make this decision, and I'm thinking about it seriously."

Trump added that he has no interest in publishing condemnations of Israel while he's president.

"Israel has a long history of condemnations and difficulties. I don't want to condemn Israel during my term. I understand Israel very well and have a lot of appreciation for it. Israelis have gone through very difficult times. I want peace between the Israelis and the Palestinians, and beyond that I think peace for Israel will be great for Israel, not just good."