Nathaniel Chalobah gave the visitors the lead before Charlie Austin levelled from the spot and the Championship's top scorer was denied a winner by in-form Hornets goalkeeper Manuel Almunia.
But Dyche took encouragement from his side's display, despite their winless run extending to four matches.
"We're not hard done by because that is the reality of football," he said.
"You can dominate games and create as many chances as we did and still not win and that was the obvious view of the game.
"I was pleased with the reaction because I thought it was terrific. From that moment onwards I felt we dominated and the chances we created, I've lost count.
"It was a penalty, I've seen it again and I was disappointed not to have another one in the second half because it looks like a clear handball and I don't know how it wasn't given.
"That aside, I am more interested in the performance, which I thought was very good again.
"The reality is though that we have to turn those performances and chances into clinical moments which change games. We so nearly did but we found a keeper on top form."
- Sports & Recreation
- Charlie Austin