Sky Sports revealed on Friday that the 21-year-old was one of eight players to be close to finalising a move to Vicarage Road.
The right-back's representative Giovanni Bia is now waiting for an official announcement and believes a switch to Watford will benefit Faraoni's career.
"We have practically defined everything," Bia told calciomercato.it. "So, we can affirm that Davide is a Watford player even if it's missing the official announcement.
"In this way, the player will remain at a club in the Pozzo family, even if, for this case, we talk about a permanent move with a new five-year deal.
"The decision has been taken to allow Davide to grow and take on a new experience. The English Championship is ideal to evaluate young talents."
Faraoni joined Udinese from Inter Milan for an undisclosed fee last summer, but he was unable to make an impression at the Stadio Friuli.