The Whites took a 1-0 lead in the relegation battle in the first half, through Raphinha's strike - the only real moment of quality in a poor 45 minutes.
Entertainment wise things didn't improve from either side after the break and Watford enjoyed possession and territory without really troubling Illan Meslier in the visiting goal. The Hornets lacked composure and the necessary ruthlessness in the final third and were punished when Samir's poor touch put Rodrigo in to score Leeds' second.
That was the match-defining moment and the Whites went in to score a third through Jack Harrison to put a not entirely deserved sheen on the scoreline.
"It's frustrating, we wanted it so badly, but the second goal was a real killer blow," said Hodgson.
"It appeared we were doing fairly well. The last thing you want really is to be in a situation we find ourselves in. For things to go so badly against you in that moment is the last thing you want to see but it happened. There's nothing I can say to change that, we have to find a way of putting this game and a very harsh result behind us. There's seven games to come.
"What we put it down to is them scoring with their only strike in the first half and they kill the game with an unfortunate mix up in our defence, after we had a very good chance."
Hodgson refused to say he was confident Watford, 19th in the Premier League and now 11 points behind Leeds, can escape the drop but insists they can still believe.
"I've never used the word confident, I don't want to set myself up for headlines or statements I can't identify with," he said.
"We have no reason to be confident, we do have reason to belief, to have faith. Results are still a distinct possibility for us. To suggest by saying that I'm now saying I am confident, I don't think Burnley or even Everton would be saying that. What Everton got today, and what Leeds have got in the last four games are results that have given them a very strong margin and a position so much better than ours.
"The mood amongst the fans I guess is pretty bad. I can't speak for them, but the mood amongst the players isn't as bad as all that. Any fair minded person wouldn't put our defeat down to a lack of belief, desire or feeling that we can do this. Confidence comes from winning matches and we don't win matches so how do you get that. There's no words or training sessions that can necessarily do that. If you want confidence you've got to win."
He admitted that Watford's deflation after the second goal could draw criticism but the overall performance wasn't deserving of what they got in the end.
"We could be after the second goal went in with about 15 minutes left, there was a slight lack of confidence or a slight feeling of 'oh dear here we go again' but I don't think that was the case in the first 70 minutes," he said.
"Why don't we win at home? I don't know. For 70 minutes our performance wasn't that bad, we found ourselves a little unlucky to be two goals down but we were and the run continues."