A Russian invasion of Ukraine "remains distinctly possible", Joe Biden said in a televised address, after the Kremlin announced that Russia's troops would begin withdrawing from the border.
The US president said he did not yet have confirmation that Russian troops were returning to their bases and that the troops "remain very much in a threatening position."
"The fact remains right now Russia has more than 150,000 troops encircling Ukraine and Belarus and along Ukraine’s border," Biden said.
Russia's defence ministry had announced earlier in the day that some military units completed their training activities and would move away from the border.
The Kremlin has repeatedly denied that they are planning an invasion despite amassing troops near Ukraine's border.
Russian President Vladimir Putin insisted on Tuesday that he did not want a war with Ukraine, after weeks of tension fuelled by the buildup of troops.
"Do we want (a war) or not? Of course not. That's why we put forward our proposals for a negotiation process," he said during a joint news conference with the German Chancellor.
Western officials welcomed the move to withdraw troops from the border but expressed scepticism that it was happening
NATO Secretary-General Jens Stoltenberg said that there were not yet any signs of a reduced Russian military presence on the Ukrainian border or "any signs of de-escalation on the ground".
"Russia has amassed a fighting force in and around Ukraine, unprecedented since the Cold War," he said. "Everything is now in place for a new attack."
In his televised address to Americans, Biden said that if Russia invades Ukraine, the human costs would be immense. He also emphasised that the US did not seek to destabilise Russia.
"To the citizens of Russia, you are not our enemy. And I do not believe you want a bloody, destructive war against Ukraine, a country and a people with whom you share such deep ties of family, history and culture," Biden insisted.
He added that the US would continue pursuing a diplomatic resolution to the crisis that "prevents the use of force and prevents the incredible human suffering that would follow."
German Chancellor Olaf Scholz, who met with Putin in Moscow on Tuesday, said that diplomatic options are "far from exhausted".
Russia also signalled a desire to continue talks with the West, with foreign minister Sergei Lavrov urging the expansion of talks on Monday.
The Kremlin wants guarantees from NATO that it won't expand to Ukraine and other former Soviet countries and that it will roll back deployments in eastern Europe, which the West is unwilling to do.
The US and allies have threatened severe consequences and tough sanctions in the event of a Russian invasion of Ukraine.
Biden acknowledged on Monday that those measures are likely to have consequences on economies in the West as well.
"To be clear, if Russia decides to invade, that would also have consequences here at home. But the American people understand that defending democracy and liberty is never without cost," Biden said, adding that it could have an impact on energy prices.
This is especially a concern in Europe which relies on Russian gas and is heavily impacted by the energy crisis.
"I won't pretend this will be painless," Biden said.