After Liverpool humiliated Manchester United 4-1 at Old Trafford last weekend, to take them to within four points of the champions, the England boss believes the title race is very much back on.
Chelsea are another side who find themselves back in the hunt for league success, with the Blues level on points with Liverpool, although United have the advantage of a game in hand on the duo.
The Italian, no stranger to capturing league titles himself, declared that whoever coped better under the pressure of the run-in would go on to win the Premier League.
"A month ago United were fresher," he told COM Radio.
"But then they played many games on the trot. This late on in the season, we all have to wait a bit more to see how each of the teams does at the moment of truth."
After guiding Real Madrid to the Spanish league title in 1997 and 2007 during two separate stints at the club, Capello still keeps a close eye on La Liga but it is his former club's rivals who have caught the eye this season.
Potential"(Pep) Guardiola's Barca are a team with a lot of potential even though it's obvious that they haven't been as strong as they could be in the past month," he added.
"At the beginning of the season Barca were incredible. Guardiola has done very well up until now.
"Everything was very easy at the beginning, but in their most difficult period he knew how to dig and he continued with his ideas.
"He left important players on the bench because he was convinced the team could still win, and it turned out well for him.
"That is a sign that the coach has a great personality."
The former AC Milan boss was also quick to praise Lionel Messi, arguably their best player this season.
"I asked (former Barca coach Frank) Rijkaard to sell him to me (while in charge of Juventus) because he does things that others don't even think about.
"Every era has its superstar, like Pele or (Diego) Maradona and Messi can be the superstar of the next decade."