The ex-European Union chief believes Sunday’s crucial televised debate could help him claw his way back into contention.
In a newspaper interview the Social Democrats leader said: “I am not in the least bit nervous.
“A successful duel can create momentum.”
Mr Schulz’s campaign got off to a promising start early this year, with thousands flocking to the party after he was chosen as candidate.
But three crushing defeats at the hands of the conservatives in regional elections, including in its heartland of North Rhine-Westphalia, knocked him way off course.
But the ever-optimistic Mr Schulz told Bild: “These were very difficult defeats for the SPD…but nonetheless, 46 per cent of voters have yet to make up their minds.
“I believe we will certainly still win the election.”
The SPD, which has stewarded Europe’s biggest economy as junior partner to Merkel’s conservatives for the last four years, was on 22 percent in an opinion poll published on Friday, while the conservatives were on 39 percent.
Sunday’s live TV debate will be the only time Mr Schulz and Ms Merkel go head to head in front of the German public before the election on September 24.
Almost half the 61.5 million people eligible to vote are expected to tune in, pollster Forsa found.
Nearly two-thirds of Germans expect Merkel to win the contest while 17 percent expected Schulz to fare better, another poll showed.
It also found that if there were to be a direct vote for chancellor, 49 percent of Germans would pick Merkel, who is seen as a steady pair of hands at a time of global uncertainty, with Donald Trump in the White House and Brexit.
Just 26 percent would opt for former European Parliament President Schulz, whose campaign focusing on social justice has struggled at a time when Germans are enjoying rising wages and record employment.
In a bid to appeal to the younger generation, Schulz told Bild the biggest domestic policy difference between him and Merkel was on pensions.
He said: “If someone is in his early 40s, he will belong to the generation that pays ever more contributions and at the end will get the lowest pension in history from his pension insurance.”