The Citizens are assured of second place and all focus is now on next month's Champions League restart, while Watford have plenty to play for as they attempt to avoid the drop.
That loss only increases the pressure on Pep Guardiola's men to overcome Real Madrid in the Champions League last 16, a tie they lead 2-1 after February's first leg.
The EFL Cup alone, which City won with victory over Aston Villa in March, will not cut it if 2019-20 is to be anything other than a hugely underwhelming campaign for the Citizens.
Before resuming their European campaign there are two more league games to tick off, with this trip to Watford quickly followed by a home match against bottom side Norwich City.
City's form in the top flight since last month's restart has been pretty impressive, winning eight out of 10 matches with an aggregate scoreline of 24-1 in those victories.
The defeats to Chelsea and in particular Southampton, though, plus the two-goal reverse against Arsenal, highlights that the dethroned champions have regressed from last season.
This is a good fixture for City in their bid to quickly hit back, having won 8-0 in September's reverse fixture - Bernardo Silva helping himself to a hat-trick in that one.
Watford had been far more solid since Nigel Pearson arrived in December as their third manager of the campaign and they are on course to avoid the drop, although they took the decision to part company with the Englishman on Sunday.
After winning back-to-back matches to give themselves some breathing space, the Hornets fell to a 3-1 loss at West Ham United on Friday and still have work to do, perhaps explaining the decision to replace Pearson.
Pearson hit out at his side on the back of that match, in which his side trailed 3-0 inside 36 minutes, but their fate is ultimately in their own hands.
However, with games against City and Arsenal to see out the season, the managerless Hornets may well require a helping hand from elsewhere - unless they can pull off a shock win on Tuesday.
Watford's Premier League form: LLLWWL
Manchester City's Premier League form: LWLWWW
Manchester City's form (all competitions): WLWWWL
Guardiola has been heavily rotating his side between games, with five more changes made for Saturday's defeat to Arsenal.
Given a lack of other options up top, Gabriel Jesus may continue to lead the line for City, who have won the last 30 league games in which the Brazilian has scored.
Watford possible starting lineup:
Foster; Femenia, Kabasele, Dawson, Mariappa; Hughes, Doucoure; Sarr, Capoue, Welbeck; Deeney
Manchester City possible starting lineup:
Ederson; Cancelo, Stones, Otamendi, Zinchenko; Fernandinho, Rodrigo, Doyle; Mahrez, Jesus, Bernardo
We say: Watford 0-3 Manchester City
Regardless of what team Guardiola fields, City will be desperate to put Saturday's cup exit behind them as they look to rebuild some momentum ahead of the Champions League restart. Watford may need three more points to avoid relegation, but they have lost their last 12 games against City in all competitions and that run looks set to continue here.