The Daily Mail report that the 27-year-old midfielder cancelled his £73k-a-week contract at the Black Cats following their relegation to League One, and is now inquiring about the possibility of joining clubs in the MLS, the Netherlands and Italy.
Following his release from Sunderland, Watford have invited the player to train with them as they assessed the former England international and are now said to be discussing a contract offer for him after he impressed manager Javi Gracia.
Rodwell, once lauded as a talented English prospect, will be looking to rebuild his career after several difficult seasons.
However, Rodwell struggled for game time at City and managed just 16 league appearances in two years - though did collect himself a Premier League winner's medal.
Rodwell was offloaded in 2014 to Sunderland, and his career faltered even further. He suffered relegation twice and also fell out of favour there too.
The 27-year-old also endured a remarkable run of 1,370 days without a victory in matches he'd started.
As a result, Rodwell will be hoping a contract offer from Watford will provide him with a clean slate and a chance to rebuild his career as a talented footballer.
Watford are also reportedly interested in signing 32-year-old Egypt international Tarek Hamed.
The 29-year-old plays his club football back in his home country for Zamalek and would cost the Hornets around £1.5m. The diminutive and combative midfielder featured in every game his country played at the World Cup this summer.