The Scots go into their final Six Nations outing of the season in Wales on the back of an impressive 28-17 victory to end France's hopes of a Grand Slam this year.
With Wales suffering defeats in their last three games, Watson feels his side have a chance to end their 18-year wait for a victory in the Welsh capital but knows it will be far from easy on Saturday.
"We can't underestimate Wales," Watson said. "They may only have won one game so far but they have been in the fight in the three others till the very end.
"Beating France was a statement win and it showed we can win against top teams. But Wales is another hard test. We haven't won there in 18 years so we know how tough it will be.
"It's a big opportunity to win in Cardiff and while we go there every time believing we can do it, we also know we'll have to be at our best to do so."