Speaking to German daily Sueddeutsche Zeitung, Asselborn said: “We Europeans have to show that the Palestinians have the right to have their own state."
He also criticized EU regarding its absence of a joint stance on Palestine.
“If France were to recognize Palestine, more states would follow it, including Luxembourg,” he added.
Last month, U.S. President Donald Trump officially recognized Jerusalem as Israel’s capital and ordered the relocation of the U.S. Embassy to the holy city.
The U.S. policy shift has triggered an outcry in the Arab and Muslim world and a wave of protests in the Palestinian lands, which left at least 16 people dead.
Also on Tuesday, the U.S. administration announced that it would suspend the $65-million aid to the Palestinians that it had planned to deliver.
Jerusalem remains at the heart of the Israel-Palestine conflict, with Palestinians hoping that East Jerusalem -- now occupied by Israel -- might eventually serve as the capital of a Palestinian state.