The outcome left Leicester in 14th position on 12 points from as many games, only two above the relegation zone, as their poor away form continued with a fifth defeat in six games.
Fans had barely settled in their seats at Vicarage Road when Argentine forward Pereyra delivered an inch-perfect cross for Troy Deeney to head into path of Etienne Capoue, who scored with a bouncing volley from 12 metres.
Watford continued to press forward relentlessly and livewire Pereyra doubled the lead in the 12th minute when he curled a delightful shot from the edge of the penalty area into the far corner. Riyad Mahrez pulled one back for the visitors with a penalty three minutes later.
(Reporting by Zoran Milosavljevic; Editing by Ed Osmond)
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