The French defender made just one appearance for the Hornets after joining from Serie A side Udinese.
After his 74-minute showing in the 1-0 defeat against Blackburn in late October, the 24-year-old did not make Watford's matchday 18 again during his stay at Vicarage Road.
Fanchone has in turn joined French side Nimes Olympique on loan until the end of the season.
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