Carlo Ancelotti says he is happy with his current Everton squad and expects the Club's performances to continue improving in the final months of the campaign.

Speaking at his pre-match press conference on Friday, Ancelotti suggested it was unlikely there would be additional incomings to Goodison Park before transfer windows across Europe close on Friday evening.

However, the Italian, who has overseen three victories and two draws from his six Premier League games in charge, insists he has the players at his disposal to maintain Everton's steady ascent of the table.

The Blues were 15th in the standings when Ancelotti took charge of his first game against Burnley on Boxing Day but go into Saturday's game at Watford three places higher.

They could climb further still this weekend with only three points separating Everton and Sheffield United in eighth.

Asked about the possibility of adding to his squad on deadline day, Ancelotti said: "I said we are not anxious to find a new player because the squad that we have is a big squad, we have a lot of players and some players I didn't know [so well] I know better now, like [Dominic] Calvert-Lewin, [Mason] Holgate, Michael Keane, all the young players that are here. I have a better knowledge of them now.

"If there was an opportunity, we could consider [it] but I think that the market didn't show for us a really good opportunity.

"So we have to think to do well in this season and, after that, we are going to have a period where we can improve the squad."

Everton's only January acquisition to date has been talented 17-year-old defender Jarrad Branthwaite from Carlisle United, a player who has linked up with David Unsworth's Under-23s.

Ancelotti was asked if there was a need to add a senior defender to his first-team squad but reaffirmed he is happy to work with his current crop before looking to strengthen in the summer.

"We don't have a lot of games until the end of the season," he said. "We have three centre-backs and I have confidence in them, so we don't need another centre-back in this moment.

"I think that the squad is good. We can improve, we can play better and I think we could have a good final [few months] of the season.

"I think we can finish well this season."

Despite the positive run under Ancelotti, Everton head to Vicarage Road looking to improve on successive draws against West Ham and Newcastle United.

Watford are themselves rejuvenated under a new manager in Nigel Pearson, who took charge of his first game on 14 December - 10 days before Ancelotti.

The Hornets were bottom of the Premier League with just one win from 16 games when the former Leicester City boss took the reins but have overhauled Norwich City and now sit 19th, level on points with Bournemouth and West Ham above them.

"It will be a tough game," said Ancelotti. "I think that they are playing really well, with strong motivation.

"In the last games they did really well. They beat [Manchester] United, they drew against Tottenham at home, so they are a really difficult team to play against.

"They defend really well, they are really dangerous on the counter-attack, and we are going to expect this type of game.

"We have to be ready, prepared and we have more possibility to win if we play well. So we have to be focussed there - to play good football and be focussed on the aspects where they are really strong."

He added: "[Playing forward] is the idea that we want to show on the pitch and I think that we showed that against Newcastle.

"We played more vertical, we have worked on it in the period since that game, and I would like to see the same on Saturday."