The 22-year-old was part of the Schalke side that claimed a 2-1 victory over rivals Borussia Dortmund at the weekend.
Looking ahead to their encounter with the Gunners, Holtby has stated his belief that the 2011 semi-finalists are currently playing to their best of their ability.
"Winning the derby has given us so much confidence," said Holtby. "To take a game like that, especially away, feels like winning a championship.
"We know we're a decent team who can play good football. To win a trophy is difficult but we have to make sure we take something from this game. It will be hard to get to the semi-finals again but you can never say never."
Holtby has been previously linked with a switch to Arsenal next summer.