It was Watson, filling in for the injured Storm Purvis for the second straight week, who made a huge defensive play inside the last 90 seconds.
Down 54-52, she deflected centre Elias Shadrock's pass intended for Ameliaranne Wells in the circle, leaving captain Wendy Frew to scoop up the loose ball.
The Steel wasted no time scoring two quick goals to knot the game up at 54-54 inside the last minute, only for Wells to put the Pulse back up by one with 15 seconds left.
However, the Steel did not panic and Fowler Reid scored as time expired to snatch an enthralling draw.
The draw keeps the southern franchise in the third and final playoff spot in the New Zealand conference with two rounds left.
While the Steel is equal with the Pulse on eight points, it has a superior goal percentage. Players never really know how to feel after a draw, and Frew was no different last night.
''I'm never happy to get the draw,'' she said.
''I think at times we could have won the game and so could the Pulse. But I guess being down with a minute to go and we came back to get the draw.
''It's a point on the board but there's certainly aspects of the game we need to improve if we want to make this top three.''
Watson's late deflection was not the only huge play she made.
Down 52-48, she picked off a pass from former Steel captain Jodi Brown with six minutes left to help the Steel shut the gap to 52-50.
All after the Steel made a horror start to the fourth quarter on the back of Te Paea Selby Rickit missing a key shot and then taking steps.
The Pulse quickly blew out to a seven goal lead and looked to have the game in the bag. But Watson had other ideas.
With Silver Ferns coach Waimarama Taumaunu watching on, little separated the teams through the first three quarters of Pulse wing defence Joline Henry's 100th ANZ Championship match.
The Steel had a chance to go into the halftime break with a five goal lead, but it conceded the last four goals on the back of a couple of penalties from the centre pass.
Jhaniele Fowler Reid had given the visitors a 29 24 lead inside the final two minutes of the half - the Steel's biggest lead of the night - before wing attack Gina Crampton was penalised for breaking.
Down by one at the half, the home side went on to win the third quarter 15-12 and take a two goal lead into the final quarter.
Steel coach Janine Southby replaced Selby Rickit with Brooke Leaver early in the fourth quarter.
Leaver landed all three of her attempts on goal and completed some tight passes to Fowler Reid under pressure.
Purvis, who was a surprise inclusion in the squad just two weeks after damaging ligaments in her left ankle against the Pulse in Dunedin, was not risked off the bench.
The Steel can earn a playoff spot with wins against the Northern Mystics and Queensland Firebirds in the final two rounds, and could yet finish second in the New Zealand conference if other results go its way.
In the weekend's other games, the Firebirds beat the Adelaide Thunderbirds 58-42, the defending champion Melbourne Vixens topped the West Coast Fever 56-48 and the New South Wales Swifts thrashed the Mainland Tactix 68-49.
ANZ Championship
The scores
Steel 55
Jhaniele Fowler-Reid 40/46, Te Paea Selby-Rickit 12/16, Brooke Leaver 3/3
Pulse 55
Ameliaranne Wells 35/41, Jodi Brown 20/22
Quarter scores: 1st, 14-15; 2nd, 29-28; 3rd, 41-43
