The Uruguayan, who signed for the Reds from Ajax in January, has netted five goals in ten games in all competitions this season.
"I think I can still keep improving and offer that little bit more," he told the club's official website. "I am happy at how the team is playing as a whole, but from a personal point of view I'd love to be able to provide that bit extra for the team."
The Copa America winner is adamant that the Merseyside club can hold their own against any opponent.
"We're certainly capable of beating anyone," he added. "The team is in good form and feeling very confident, and it's also good the manager can see we have the ambition to pick up trophies.
"But for now, we'll take each match as it comes and hope to pick up some victories in the next few games."
Liverpool take on Norwich City at Anfield in the Premier League on Saturday.