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A first win in nine for the Hornets could act as a springboard for them to put distance between themselves and the bottom three but two triumphs over the Canaries in the 2019-20 campaign were still not enough to beat the drop.
Ranieri, who was appointed in October, said: “It is a crucial match, a cup final, but I think the Premier League doesn’t finish after the Norwich match.
“It will be very important to win the match but there are other matches after.”
Joao Pedro’s late goal at Newcastle last weekend helped Watford end their seven-game losing streak with a 1-1 draw in the North East.
The Hornets have not tasted success since a stunning 4-1 triumph over Manchester United in November but so poor has the form been of the other teams around them that Ranieri’s men have remained outside of the relegation zone all season.
While the ex-Leicester boss knows the psychological importance of being above the bottom three, he also talked up the role the home fans can play at Vicarage Road on Friday when 18th-placed Norwich visit.
“Of course we want to always stay over the relegation battle but we are inside the relegation battle, even if we (are not) in the three bad positions,” Ranieri added.
“I said from the beginning our fans are very important for us.
“It is a crucial match and I hope Vicarage Road will be full of our passionate fans, pushing behind us because it is a very important match. We together want to win this very important match.”
The experienced Italian handed full debuts to three new signings at St James’ Park with Samir, Hassane Kamara and Edo Kayembe drafted into the starting XI to good effect in the north-east.
Ben Foster also returned after a spell on the treatment table with a groin injury and was praised by the 70-year-old.
Ranieri said: “I think the three new signings were very good at Newcastle and they close much better the team. They brought quality, experience and a new strength to the team. Now we have a very good block.
“And yes of course Ben is a very good player, also a very good fit and he is a leader. He commands very well the defensive line and that is important for us.”
The Watford boss was more cryptic about Danny Rose, who is training alone after being told he is surplus to requirements by his manager.
When asked about the former Tottenham left-back, Ranieri replied: “Look, I have my defenders and I am very happy with my defenders.”
Pushed further if Rose was close to a move, he added: “Yes, he is close with me and close with the club at this moment.”