Rams midfielder Steve Davis scored the only goal of the game, from distance in the second half, but it was County goalkeeper Frank Fielding who received a host of plaudits following a string of saves at Vicarage Road.
Despite losing a match that his team dominated for large parts, Dyche believes that there is plenty to be happy about.
"The positive is that we dominated the first half and a lot of the second half," Dyche told the club's official website.
"Their keeper went home as man-of-the-match.
"That's often the reality of a game like that. We felt we put them under enough to pressure to score goals.
"You feel disappointment but the performance was good in many ways."
Watford are at home again on Tuesday evening, playing hosts to West Ham United.