The Reds head into the game on the back of their thumping 6-0 victory over Aston Villa at Villa Park on Sunday in the Premier League.
With Jurgen Klopp’s men currently nine points adrift of the top four in the Premier League, Liverpool’s best chance of qualifying for next season’s Champions League may be by winning Europe’s second tier club competition this term.
However, former Arsenal man Nicholas feels that the Reds could end up struggling in the first leg in Germany.
Nicholas told Sky Sports: “It was a stunning result for Liverpool at Villa Park, but what does it mean? They’ve caught up with a few teams and it’s all looking a lot more positive with Philippe Coutinho and Daniel Sturridge back.
“Can they afford to risk them on Thursday night? I’d be surprised if Jurgen Klopp did, which means more changes. That makes this a dangerous game for me. Christian Benteke comes in but his confidence is going to be low after seeing himself slip further down the pecking order.
“As for Augsburg, I’m a strong follower of the European leagues but even to me they’re a bit of an unknown.
“They’re having a pretty tough time of it in the Bundesliga but I’m going for them to edge the first leg as Liverpool have a horrible habit of taking one step forward then another backwards.”
Liverpool take on Manchester City in the League Cup final later this month and have the weekend off after their elimination from the FA Cup at the hands of West Ham United.
The Merseyside outfit finished sixth last season in the Premier League under Brendan Rodgers.
MORE: Man United latest news
MORE: Arsenal latest news
MORE: Chelsea latest news
MORE: Liverpool latest news