Almen Abdi scored from a free kick three minutes before the break to increase Wolves' relegation woes.
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Deeney had another chance midway through the half, but his header was comfortably gathered by Carl Ikeme.
The Wolves goalkeeper denied Marco Cassetti's near-post drive on 32 minutes, but he could do nothing about Abdi's free kick on 42 minutes.
The midfielder lifted the ball over the wall from 25 yards and into the top corner to give Watford the lead.