The Serbian winger is set to leave Anfield on loan in the next few days.
The 21-year old was thought to be close to completing a loan switch to Fenerbache - as reported by BBC Sport - but that deal appears to have been held up.
talkSPORT now claim that Watford are hopeful of stealing in and boss Quique Sanchez Flores is confident that the Hornets' offering of Premier League football will be more appealing for both Markovic and his parent club.
The Serbian winger joined the Reds from Benfica last summer and appeared 31 times, scoring on three occasions.
While he offered glimpses of the quality that prompted Brendan Rodgers to sanction a big-money move, he all too often failed to have a big enough impact on games.
At 21 years old, however, he is by no means a lost cause and a Premier League move could be just what’s required to get him firing again.