The player's agent Giovanni Bia has confirmed that discussions between the two clubs are taking place, with an official announcement expected soon.
"We are talking about and evaluating the prospect of him going to Watford," he told tuttomercatoweb.
"If the guy leaves Udinese he will almost certainly go there because it is a club with links to Udinese and we believe it would be the best solution for everyone.
"We would like to make a decision soon. Faraoni is in a hurry to know his future."
Faraoni, who plays at right-back, has completed previous stints with Lazio and Inter Milan.