"North Korea is nearing the red line", he said without elaborating on the consequences of crossing it.
"There is no military solution for this conflict, it must be worked out via negotiations", Chancellor Angela Merkel said in a YouTube interview, criticizing what she called escalating rhetoric by "all sides".
Mr Moon wants to engage with the North, but his efforts have so far been met with a string of threats and missile tests as Pyongyang works to build nuclear-armed missiles that can reach the United States mainland.
"If the regime of South Korea truly wants peace, it should not recklessly fault the DPRK but clearly understand what is going on now".
The annual Ulchi Freedom Guardian exercises, which will start on August 21, would "further drive the situation on the Korean Peninsula into a catastrophe", according to a brief statement released by the North Korean state agency KCNA.
The 10-day command post exercise known as Ulchi Freedom Guardian is to begin Monday and will involve tens of thousands of US and South Korean servicemembers.
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South Korean President Moon Jae-in has said US and South Korean policies are aligned on North Korea and promised there "will be no war on the Korean peninsula ever again". "This is a firm agreement between South Korea and the United States people can be assured and trust that there will be no war".
But as State Department spokesperson Heather Nauert said on Tuesday, the U.S. has no plans of stepping them down. When asked about potential unilateral USA action, he said, "that's purely speculative and a decision to do that would be by the president".
Tensions around Pyongyang's missile program have flared up in the recent weeks, following the adoption of the UN Security Council sanctions (UNSC Resolution 2371), which led to North Korea trading threats and warnings with the United States.
Moon, who took office in early May, held a summit meeting with US President Donald Trump in late June, reaching an agreement that South Korea would become a dominant player in addressing the peninsula issues. "I do not necessarily believe that showed his determination to take military actions", he added.
"Also, even if the United States takes military action outside the peninsula, I am confident it will sufficiently consult with South Korea in advance if such action may increase tension between the South and the North", he said. He urged the North to halt its efforts to develop a nuclear-tipped weapon that could reach the USA mainland.
Chinese foreign minister Wang Yi said in a phone conversation with his Russian counterpart, Sergey Lavrov, this week that the two countries should work together to contain tensions and permit no-one to "stir up an incident on their doorstep".