Cesare Prandelli's Italy have qualified for the Euro finals in Ukraine and Poland with two games to spare and without defeat. However Cannavaro, who retired in July, is cautious given their poor display in last year's World Cup.
"[World and European champions] Spain are of course the favourites, they have the best team, the best generation, but I think Holland and Germany also have a chance of winning it," the former Real Madrid centre-back told Reuters on Thursday.
"Italy? Let's see," he said at the Leaders in Football conference at Chelsea's Stamford Bridge stadium.
Cannavaro started his career at Napoli and believes Walter Mazzarri's revived side can challenge in all competitions this season thanks to forwards Ezequiel Lavezzi, Marek Hamsik and Edison Cavani - along with Fabio's brother Paolo in defence.
"Napoli have started well and have a squad built to fight right until the end both in the Champions League and Serie A. Let's hope the season finishes well," said the 38-year-old, now an ambassador for Al Ahli of Dubai.
Former World Player of the Year Cannavaro quit as a player at Al Ahli in July because of a recurring knee injury.
Another of his former clubs are Juventus, who like Napoli are riding high in Serie A after two seasons of woe and are revelling at their new stadium even though the ground has yet to be sponsored despite the club budgeting for the revenue.
Cannavaro denied their demotion in the 2006 match-fixing scandal known as "Calciopoli" was a reason for the stadium not yet being sponsored.
"Calciopoli now is finished. They have paid the price, they are starting from zero and trying to do something new. The stadium is extraordinary so I think even without a sponsor people can enjoy it," he said.
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