' should be 'I wonder where my watch is' ?
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Strictly speaking, "Where is my watch?' should be 'I wonder where my watch is'?
The correct form is: I wonder where my watch is. Likewise, the correct form is also: Do you know where my watch is? It's because the first three words form a question. The question mark refers to these three words. If I wanted to form a question without them I would have to say: Where is my watch?