Domenech, who quit as France coach after their FIFA World Cup™ debacle in South Africa in 2010 and was replaced by Laurent Blanc, said that he believed the current squad could go deep into the tournament which is being jointly held by Poland and Ukraine from 8 June to 1 July.
"I see France as being among the favourites," he said. "Eighteen matches without a defeat, wins over England and Germany away and a win over Brazil also, first in our qualification group - all that makes you a favourite," he said.
"Let's be confident. We can get it wrong, of course, but there is no point in lacking ambition. It's the semi-finals as a minimum target."
On the downside, Domenech said he rated the current squad as still being in a transition stage "and which is still looking for its true character and leader."
"You can always ask who in this team is indispensable apart from the goalkeepers and [Karim] Benzema," he said.
"But there again, just having a good goalkeeper and a good goalscorer isn't too bad. And with his talent, Karim could be the player of the tournament if he only moves a bit better."
Domenech said he saw France's opener against England as being "easy" as the English "had no great talents." "After that we must not lose to Ukraine and that will be it for the first round for us."
On his own future, 60-year-old Domenech, who was coach of France from 2004 to 2010 said that after a two-year break he would be ready later this year to resume being coach of a national side.
"I will be on the lookout for a job in September. Not out of any sense of revenge but because I want to do it again," he said. "I want to take over as coach of a national team again."