The Italian forward struck twice as Nice crushed Monaco 4-0 to move top of the table on Wednesday.
After a poor spell at Liverpool, and on loan at AC Milan, Balotelli has now netted four times in two league games for Nice.
And, after the 26-year-old claimed he can still lift the Ballon d'Or, Favre feels his star is slowly demonstrating the level he can play at again.
"The goal for 2-0 is very important. Psychologically, it really gives confidence. We know we have the margin," he told reporters.