The 27-year-old has seen much of his season blighted by injury and has often struggled to get into the Gunners' starting line-up ahead of Pierre-Emerick Aubameyang and Alexandre Lacazette, the club's two most expensive signings.
The former Manchester United man has scored five goals in his last five appearances, though, including two in the 3-2 Premier League win over Southampton and their calming first goal of the 2-2 Europa League quarter-final second-leg draw with CSKA Moscow.
Wenger believes Welbeck is thriving from a run in the side and is confident he would be a shrewd pick for England boss Gareth Southgate.
"For Danny, it has been very good recently because he got games," said the Arsenal manager. "He needed games and what is good with Danny is that he has a combination of power, pace and determination when he is really at his best physically. He looks like that is where he is now.
"Maybe he would not be there now if he had played all the games. If Danny is injury-free, he is a very good player. We spoke many times about Danny when he was regularly in the national team. He was a very good player."
When asked if Welbeck's recall to the most recent England squad had boosted his confidence, Wenger replied: "Maybe. That reminded him that he is not completely forgotten because at the moment everybody is talking about [Harry] Kane and rightly so.
"But there is room for him [Welbeck]. If you are national coach, what for me is very interesting is that he can play wide – on the right, on the left – and central. He can play with anybody."
Arsenal travel to Newcastle United on Sunday.