Watson only played six times for Watford last season and was an unused substitute as the Hornets drew with Liverpool on Saturday.
Ben Watson is sent off for Watford
And with the 32-year-old out of contract at the end of the campaign, it is possible he could be moved on before the close of the transfer window.
Forest manager Mark Warburton admitted at the end of July that he was keen to add two more players to his squad, with a central midfielder said to feature on his wishlist. However, only one new face, Everton loanee Kieran Dowell, has arrived so far.
But Cardiff are also expected to strengthen their central midfield options, having lost Peter Whittingham to Blackburn Rovers earlier in the summer.
Cardiff City manager Neil Warnock
Both Nottingham Forest and Cardiff boast 100 per cent records this Championship season, which should only increase their appeal to Watson.
Should Cardiff / Nottingham Forest make a move for the Watford midfielder?