The world number one also believes that he continues to improve every time he takes on the double French Open winner on clay despite failing to win against Nadal in five attempts on the surface.
"It's good for me to play against him," Federer said.
"He sometimes makes me improve my backhand. I think that problem is solved for me. Today I start to miss on the forehand but, look, again, it can happen over a few minutes that you're going to have a downfall on one of your shots.
Monte Carlo Masters
Nadal claims first serve the key
22/04/2007 AT 17:17
"Again, you should try to avoid it, and that's going to make you practise and make you a better player. I enjoy playing against him and I think [it is] the same for him."
The 25-year-old Swiss made 19 unforced errors on the forehand as he fell to defeat in a repeat of last year's final in the principality.
"We can improve playing against each other," Federer continued.
"Mistakes, [a] few too many, I guess. I am not happy about the performance of my forehand. Rarely it happens to me, because it's my best shot in the game. I guess it's a bit different against Rafael.
"You've got to keep on pushing and I just missed a few too many to go a break down in the first set."
"I should have used the chances when I had them early on. Unfortunately it turned around with a few mistakes. But I feel this match gave me some information.
"I think I'm absolutely in the mix with him on clay, which is how I wanted to feel.You know, it's always disappointing to lose but I feel like I didn't play well and still it was close. That's a good thing."
Last year Nadal went on to also beat Federer in the final of the Rome Masters two weeks later and the French Open final at the beginning of June.
Monte Carlo Masters
Nadal wins third Monte Carlo title
22/04/2007 AT 12:17
Monte Carlo Masters
Rafa sets final date
21/04/2007 AT 16:18