The Greek has put in a string of solid displays while deputising for the injured Heurelho Gomes.
“I prefer my players to be in the best condition, fit and able to play," Gracia said. “In this moment, he is playing well."
“He now has the confidence that he didn't before. He's enjoying this moment and I am happy with his attitude."
Meanwhile, 16-year-old full-back Lewis Gordon has been challenged to become a regular for Watford's U23s.
"He started off well, playing that friendly in pre-season with the first-team. He's done really well in the 18s and he trained again with the first-team last week.
"With Brandon Mason going out on loan, there is a spot at left-back and it's up for grabs. David Sesay has played there but if Lewis does well he could end up making it his own."