"I'm happy [with] the way I'm playing," Federer said. "He's been impressive no doubt. He's been playing excellent."
Nadal is 6-1 against Federer on clay -- Nadal's only loss on the slow surface coming last year at Hamburg, Germany.
"There's only a handful of players who can beat him on clay, he's that dominant," Federer said. "I'd like to be able to push him tomorrow and see what he can come up with in the important moments. Because I'm playing well again."
Nadal is the three-time defending champion and has not lost a set at Monte Carlo since beating Federer in the 2006 final.
Nadal has not even been taken to a tiebreaker so far.
"I think I am playing well; I am doing good work," Nadal said. "I think I am more adapted to clay every match. I play more clay [court] style every day, having control of the point with the forehand."
Djokovic called for a trainer at the end of the first set, then shook hands with the top-ranked Swiss player after losing his serve in the fifth game of the second.
"From the start I didn't feel so great," Djokovic said, complaining of dizziness and a sore throat.
"I just couldn't get enough energy back after each point. I feel dizziness a little bit in the last three days. I don't know. Doctor in the tournament couldn't give me the right diagnosis. I'll check as soon as possible."
Djokovic had a similar illness in February playing against Russia in the Davis Cup, retiring against Davydenko when leading in the reverse singles, and afterward complaining about dizziness and low energy.
After saving three break points in the fifth game of the first set, Federer took control. He broke the Serb in the eighth game and served out the set -- with an impressive 94 percent of points won on first serve.
Djokovic, the Australian Open champion, broken twice more by Federer in the second set, believed it was too risky to continue.
"It's not worth it," Djokovic said. "I'm just 20 years old. Still a lot of time, a lot of tournaments to come."
Davydenko's clever angles and ability to sustain rallies troubled Nadal, but the Russian was unable to take advantage of his opportunities, converting only one of five break points. Nadal broke Davydenko five times in seven chances.
"Every point is a long rally," Davydenko said. "Nadal is very tough, physically he is in a top condition."
Nadal won the match when Davydenko's attempt at a forehand winner went long.
Nadal's last defeat at Monte Carlo came in the third round against Guillermo Coria five years ago. The Spaniard was out in 2004 because of injury and since has won 21 straight matches.
Nadal took the first set by breaking Davydenko's serve when the Russian hit a forehand wide from the baseline.
Nadal got another break to go up 3-1 in the second. Davydenko broke right back, then lost his serve again to trail 4-2.
In the seventh game, Davydenko played some of his best tennis of the tournament, pinning Nadal to the baseline and hitting winners down the line off his strong forehand. But he failed to convert three break points, then complained that the tournament balls slowed down his game.
"The balls are more heavy," he said. "I didn't hit so fast."
Davydenko can still be pleased with his start to the season, after beating Nadal for the title at Key Biscayne, and advancing last week to the Estoril Open final, where he had to retire against Federer because of a leg injury.
"For me it was a good week, semifinal here," Davydenko said. "Now I prepare for Rome."