A run of just two points from three La Liga matches has left Valencia seventh in the table on 42 points, one place and one point behind their opponents Real Betis with the top four a further point away.
Betis, by contrast, have won two and drawn the other of their last three games and Valverde told AS: "They come here in a pretty good run of form.
"They are a very difficult team with great spirit and play very well on the counter. For us it is a very difficult game.
"Losing against Betis would be a step back. In the remaining games there is no room for error.
"We have a clash against a direct rival and, after the last few games, it is particularly important."
Valverde's future remains uncertain with no resolution as yet over a possible extension to his short-term contract, which expires in the summer.
An extension to June 2014 was reportedly among the subjects up for discussion when he met with club president Manuel Llorente this week, but Valverde said: "There is nothing new."
Asked about the possibility of other coaches being approached, he added: "Valencia will do what they think is best for the organisation. I understand."
Valverde will be without defender Victor Ruiz and Ricardo Costa is unlikely to feature, though France international Adil Rami came through a full training session yesterday to potentially ease Los Che's central defensive headache, as did full-back Joao Pereira.
Diego Alves will start in goal while Argentinian forward Pablo Piatti misses out after suffering a thigh injury in a training match.
Defender Paulao is a major doubt for Betis with a hamstring problem, with a decision to be made on the morning of the game.
Coach Pepe Mel expects to be without the Brazilian as well as confirmed absentees Juan Carlos, Salva Sevilla and Damien Perquis.
Mel told realbetisbalompie.es: "It's an important game for us against a great rival. The important thing is that they are points that would give us hope of getting as high as possible.
"It is a joy that is a direct rival. It is very difficult and we play against a team that has just been eliminated from the Champions League and have strong claims to be in the top four.
"The important thing for us has to be put Betis in Europe and shorten the (qualifying) path. I have a goal of 11 games to put Betis in Europe. "