Moon made the comments during the opening ceremony of the world taekwondo championships in the South Korean town of Muju, where a North Korean delegation led by International Olympic Committee member Chang Ung was also present.
This was the fourth test firing of the missile which is planned to become operational by year end, after two more test firings.
North Korea has tested a rocket engine that could be fitted to an intercontinental ballistic missile, a USA official said, in an apparent provocation ahead of a summit between President Donald Trump and the leader of South Korea.
"We should make every effort to strengthen our national defense with the nuclear capability as the backbone", North Korea's official newspaper Rodong Sinmun said in an editorial, according to Yonhap News.
The escalation of rhetoric between Pyongyang and Washington follows the death of 22-year-old American student Otto Warmbier, who the North Korean authorities returned to the US last week in a comatose state.
He called for Kim "stop developing missile and nuclear programmes and come out on to the path of denuclearisation on the Korean peninsula". He had been held by North Korea for 18 months and was released last week in a coma with brain damage.
In March, Jang reportedly said in Japan that there was no reason for the North to stay away from the Olympics, but that the games would be hosted by South Korea.
Kim Jong-un, the supreme leader of North Korea.
Calling North Korea the "top security threat" to the United States, Tillerson said China had a "diplomatic responsibility to exert much greater economic and diplomatic pressure on the regime if they want to prevent further escalation in the region".
In February, a South Korean resident of Cambodia told RFA that a North Korean restaurant operating near the country's famed Angkor Wat temple complex had closed while another was struggling to stay in business following last year's strengthening of United Nations sanctions curbing funds for Pyongyang's nuclear and missile programs. "A policy of embracing North Korea is possible when we have a defense capability that surpasses that of North Korea".
He added that the global community is infuriated by the death of American Otto Warmbier who died six days after North Korea freed him on June 13.
Moon will travel to Washington, D.C., next week; he's planning to meet with President Trump for a two-day summit, from June 29-30.
Otto Warmbier certainly did not deserve to die, but neither did the millions of North Koreans who have been starved or worked to death in 69 years of brutal repression by their communist government.