Pompeo made the remark during a TV interview on Monday amid concerns North Korea may stage an intercontinental ballistic missile test or other provocation as a threatened "Christmas gift" for the US, reports Yonhap News Agency.
"We're watching it closely. We're monitoring," he said, noting that key meetings of the North Korean ruling party are currently under way in Pyongyang.
"We're watching very closely... We maintain our view that we can find a path forward to convince the leadership in North Korea that their best course of action is to create a better opportunity for their people by getting rid of their nuclear weapons.
"We're watching what they're doing here in the closing days of this year, and we hope that they'll make a decision that will lead to a path of peace and not one towards confrontation," the top US diplomat added.
North Korea earlier said that it is entirely up to Washington what "Christmas gift" it wants to get.
The holiday passed without a test, but Washington and Seoul remain on high alert.
The warning came months after the denuclearization talks stalled following the second summit between North Korea's Kim Jong-un and US President Donald Trump which ended without an agreement due to wide differences.
( With inputs from IANS )