The reigning Bundesliga champions drew 2-2 in the first leg of their last-16 tie against Shakhtar Donetsk, and Schmelzer believes the squad are in a fantastic position heading into Tuesday night's second leg at home.
"We're delighted about proving to our last remaining critics that we're in a position to mix it in Europe," he told Fifa.com.
"It was very important to do well in our group with Real Madrid, Manchester City and Ajax, all of them domestic champions. If we make it to the quarter-finals, we’ll set ourselves a new target.
"I think we put on a good show in Donetsk, but we let ourselves down with the kind of errors that are immediately punished at this level. We could have taken more from the game, although when you look at the match as a whole, we can be satisfied with the draw because it’s put us in a good position."
Schmelzer is also keen on securing a permanent place at left-back for his country, and he believes that Germany have an excellent opportunity - as long as they remain focussed - to qualify for World Cup 2014 in Brazil.
"Obviously, Brazil is my target. Playing at the tournament would be the best thing ever. But before then, we have a few goals with Dortmund, and we're not through qualifying with the national team yet," the 25-year-old added.
"It's always tough to settle into the national team because you’re only ever together for a short time. But in the last couple of years a lot of things have improved.
"You get to know the other players better, and you take the movement and tactics to heart. We're in very good shape as a team, which is obviously positive for me too.
"Naturally, everyone thinks we’ll stroll away with six points from the double-header with Kazakhstan, but let's not forget the so-called little teams are getting better and better, and you hardly ever see thrashings nowadays. We'll have to maintain our focus, but if we do, it should be enough for two victories."
Joachim Low's men are currently top of Group C in qualifying with 10 points from four games, and are looking likely to assure a spot in the 32-team tournament next year.