Sky Sports understands several Premier League sides are tracking Deeney as they look to bolster their attacking options before the close of the transfer window.
Deeney, who scored 20 goals last season, is regarded as one of the best strikers outside the Premier League.
The 25-year-old has picked up where he left off last season, scoring Watford's winner in their 1-0 victory over Birmingham on the opening weekend of the season.
Deeney's form over the last 12 months has seen him come to the attention of a number of top Premier League sides who are ready to make a move.
Watford boss Gianfranco Zola is a huge admirer of Deeney and has previously admitted the player could play in the Premier League.
Watford would be loath to lose their star striker, but they are aware they could face a fight to keep hold of him if any of his Premier League suitors come calling for him.