Nugent netted eight minutes from time to give the Foxes a 1-0 lead to protect in Sunday lunchtime's second leg at Vicarage Road.
Both sides created chances prior to Nugent's header. Leicester's best openings came during the first half while Watford's Ikechi Anya and Matej Vydra spurned one-on-one opportunities either side of the break.
Pearson said: "It's evenly poised and both sides will feel they've a good chance of progressing. It's going to be tight, as both sides will have expected.
"It's nice to go into the second game with a narrow advantage, but we'll try to win that one as well because we're a better team when we're on the front foot."
Nugent headed home Anthony Knockaert's free-kick in the 82nd minute to end a 16-game goal drought.
It was the Leicester leading scorer's 15th goal of the season, having been stuck on 14 since scoring the winner in a 2-1 home win over Wolves on January 31.
Pearson was pleased to see the striker break his duck, but feels the recent lack of goals has not affected the player or the team.
"Strikers thrive on goals and hopefully it will give him that extra confidence," Pearson added.
"Not that he's been lacking confidence, really. He always gives you enthusiasm and work-rate and affects the game. I'm pleased for him, but more importantly he's got us a narrow lead."