Roy Hodgson's side face the Azzurri in Kiev after winning Group D and are in buoyant mood, with the former West Brom boss still unbeaten with the national team.
But former Italy international Capello, the man Hodgson replaced, is predicting a Germany-Spain final while also admitting that he has mixed emotions ahead of the clash between his native country and former charges.
"I have contrasting sentiments about Sunday’s game," the 66-year-old told the Mirror.
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"I worked with England for four years and I can’t easily forget that. However, Spain and Germany will be the two finalists at Euro 2012."
Germany face Greece on Friday night, with Spain playing France on Saturday, and Capello went on to elaborate on the clash of styles he is expecting if the two countries do reach the final.
The potential match-up would be a repeat of the 2008 final, which La Roja won 1-0 thanks to a Fernando Torres goal.
"Germany have an incredible spirit and have real strength, while Spain are the side who play the best football even if they are missing something in attack – they need a player like Lionel Messi," Capello opined.
"Generally speaking, I think that these two sides are superior to the rest of the teams in the competition."