"Jose is ready. He didn't train the first day of this week, but the second he did and he is available," Gracia told the British media.
Greece international Holebas has played an important role in Watford's strong start to the campaign.
The 34-year-old has been directly involved in six league goals, more than any other defender, scoring twice and providing four assists.
"Jose is important because he is a good player. This season he is playing really well, but it wasn't a problem if Jose is not available as we have Masina who is always ready to play," Gracia added.
Dutch defender Daryl Janmaat and midfielder Tom Cleverley are back in training after recovering from injuries but will not be rushed back into action.
Watford are ninth in the table with 20 points, one place above Leicester.
(Reporting by Shrivathsa Sridhar in Bengaluru, editing by Nick Mulvenney)
