Napoli have reportedly asked after Gerard Deulofeu, but Watford want €30m for the former Milan winger.
According to Calciomercato.com, Carlo Ancelotti considers the Spaniard a potential reinforcement for his squad next season.
There have been talks between director of sport Cristiano Giuntoli and agent Alberto Botines over the last few days.
However, the €30m asking price is considered to be far too high and his representative is therefore working to get Watford to lower their expectations.
The 25-year-old is a right-sided winger, but can also play on the left or in a more central role.
Watford purchased him from Barcelona for a total €14m plus performance-related bonuses in January 2018.