The pressure has continued to grow on the long-serving manager following another campaign of disappointment, as the Gunners are now relying on the Europa League to salvage some pride.
Last week's 2-0 first-leg win over AC Milan in the last-16 stage of UEFA's secondary competition gave Wenger some breathing space, as did the 3-0 home win over Watford in the Premier League, but former Arsenal forward Nicholas claims that the Frenchman is living on borrowed time.
Ahead of Thursday's return match with Milan at the Emirates Stadium, Nicholas told Sky Sports News: "After the shambles of Arsenal's last home game in this competition, when they nearly blew it against Ostersunds, Arsene Wenger will play a strong lineup with a free weekend to follow.
"I do think at close to even money it is a great price on Arsenal to win given the quality of players who should play and it is another opportunity to build momentum, and get the fans that are there on side. I'm actually going a step further and backing Arsenal to win by three or more goals against this bog-standard Milan side.
"However, I also have a feeling that there might be an announcement by the manager either on Friday or over the weekend to confirm that he is going to step down in the summer, perhaps going upstairs, easing the tension and allowing the team to have a go for the Europa League without the same strain.
"He knows the fans don't hate him, they're just angry with him, but it was the first time I've heard him use the word 'hate' and I just think he's realising he needs to do something to ease the anger. I think when he looks up and sees 25,000 fans in the stadium he created that he'll come to a decision that something has to change."
Wenger has called on supporters to return to the Emirates Stadium after a number of seats were left empty for recent home games with Manchester City and Watford.