The 20-year-old scored one goal in 12 appearances for the Hornets and may go straight into the Fulham squad for Saturday's clash with Norwich.
Hornets boss Sean Dyche said: "I think this loan has gone very well for Alex as an individual and us as a team. He became more and more of an influence for us the more used to Championship football he got.
"I kept impressing at the time we got him that he'd not played a competitive match in his career to that point - so I think he's developed really well.
"He's another young talent who we'd monitored from pre-season. We wish him well with his future at Fulham."