Watford chief executive Scott Duxbury has hailed Javi Gracia as a "fantastic" success since returning to Vicarage Road as head coach.
The Spaniard, previously in charge from January 2018 to September 2019, was reappointed in October when Paulo Pezzolano was sacked.
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The Hornets have won seven of their 15 games since then, including the past three, and are sixth in the Championship table before Thursday's home game against Birmingham City.
"Javi has been fantastic since he returned," Duxbury told the club website.
"We knew from his first spell at the club that he just gets what Watford is all about; he understands the culture, the people, and recognises what it means to the fans.
"There is a connection which has been reflected in the way the team now plays with adventure and attacking intent."
Watford have one of the youngest squads in the second tier and Duxbury vowed that none of their players would leave in January without Gracia's approval.
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"Recruitment underpins pretty much everything about the club, and our track record of signing young players, and seeing them shine in a Watford shirt as they develop before going on to bigger things, has been clear for all to see in recent years," he added.
"The rich pipeline of talent continues, and that's why our recruitment strategy in the summer was based around a particular age profile.
"With (Kwadwo) Baah and (Rocco) Vata to return soon, it's clear there will be even more competition in the matchday squad and other players may have to leave, but they will only be the ones Javi believes would benefit from a fresh start.
"Nobody will leave that Javi doesn't want to lose. That being said, we are in constant discussion with Javi about squad strength and if an opportunity presents itself, we will move."

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