The Magpies have been short of goals this season, only managing to find the back of the net 20 times in their 22 league games so far, and Benitez is after more firepower up top during the current transfer window.
Deeney, 29, has also endured a difficult season in front of goal for the Hornets, with only two goals from his 13 league appearances, both coming from the penalty spot.
However, the forward has managed ten or more league goals in his previous six seasons for Watford, something which may attract Benitez.
The forward has been with Watford since his £250,000 move from Walsall in 2010, however, may be open to a move away to gain more regular first team football.
Newcastle have yet to make a formal bid for the striker, however, have enquired to the Hornets over the club captain’s potential availability.