Australia reached the finals of the previous World Cup under skipper Michael Clarke in 2010 in the West Indies.
The George Bailey-led Australians have a world ranking of ninth in Twenty20.
Watson, who has arrived in the UAE after being rested from the one-day series following a calf injury, is brimming with confidence, The Sydney Morning herald reports.
“We haven''t really had a long time together as a Twenty20 team so it will be good playing Pakistan. We were unlucky on missing out on the final the last time. This team has got good balance of youth and experience, and on our day, we can beat the best teams in the world,” he said.
Bailey said spin-bowling allrounder Glenn Maxwell, who failed to take a wicket in the one-day series, but produced scores of 38, 28 and 56 not out, could be the side’s X-factor in Sri Lanka.
“He was someone (head coach) Mickey Arthur and I pushed really hard for (at selection) just because of the x-factor and the versatility that he has,” Bailey said.
The skipper is keen to get some game time into new arrivals Ben Hilfenhaus, Clint McKay and fellow pace bowler Pat Cummins, as well as Watson, middle-order batsman Cameron White and Brad Hogg.