The element specific magnetization and ordering in trilayers consisting of 0.3 -1.4 monolayer (ML) thick Fe layers embedded in Pd(001) has been determined using x-ray resonant magnetic scattering. The proximity to Fe induces a large moment in the Pd which extends ∼ 2 nm from the interfaces. The magnetization as a function of temperature is found to differ significantly for the Fe and Pd sub-lattices: The Pd signal resembles the results obtained by magneto-optical techniques with an apparent 3D to 2D transition in spatial dimensionality for Fe thickness below ∼ 1 ML. In stark contrast, the Fe data exhibits a 2D behavior. No ferromagnetic signal is obtained from Fe below the 2D percolation limit in Fe coverage (∼ 0.7 ML), while Pd shows a ferromagnetic response for all samples. The results are attributed to the temperature dependence of the susceptibility of Pd and a profound local anisotropy of sub-monolayered Fe.