A largely uneventful afternoon at the Riverside produced just one goal, and it came for Watford as Jose Holebas struck early in the second period to ensure that the visitors collected all the points in a 1-0 win.
Karanka has claimed that his side were unfortunate to suffer defeat, but has conceded that improvement is needed as they battle to overcome a run of six matches without a win.
"I don't think we deserved to lose. Especially in the first 35 or 40 minutes we played really well. But, in the second half Watford showed their experience. We lost our intensity and we conceded," Karanka told reporters.
"We are in the Premier League so mistakes are going to punish us. Today it was a good opportunity to add points but we couldn't. Now we have to think about next week. We have to play 90 minutes in the way we played in the first half and score the chances that we do have."
Middlesbrough, who return to action away to Arsenal next weekend, currently sit just outside the relegation zone in 17th position.