His flourishing partnership up front with Troy Deeney, who has scored five goals in his last six league games, have propelled last season's promoted side up to seventh place.
"I think Ighalo is completely clever, he chose five months ago the option to stay here with Watford," Sanchez told British media.
The Nigerian striker joined Watford in July 2014 from Italian outfit Udinese after spending a few seasons on loan with Granada in Spain.
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"It's very clever, he knew perfectly it was the best option for him. I think he'll finish the season with Watford, after that anybody knows," Sanchez added.
(Reporting by Chris Peters in Bengaluru; editing by Justin Palmer)
