Having come into the final day of action trailing 10-6, Watson's men were unable to bridge the gap, with Welshman Jamie Donaldson scoring the winning point in a 4 and 3 victory over Keegan Bradley.
But Watson believes the damage was done in the two foursomes sessions on Friday and Saturday, from which Europe took seven points to the States' one.
"The real difference was the foursome play," he told NBC. "The combined scores four our team in foursomes were really high compared to theirs.
"That was the biggest difference in the play this week.
"We made them think about it, certainly early on in the singles, but then they turned it on.
"But the foursome play is what separated the two teams."
Asked what he would tell his team following the defeat, Watson said: "You played your best, but it wasn't good enough.
"You've got to find out what it takes to play a little bit better."
At the conclusion of the event-ending singles, the final score was 16 1/2 - 11 1/2 in Europe's favour.