The relegation-threatened Bluebirds face a difficult challenge to stop a Reds side in great form and full of momentum following their 3-0 win at Manchester United on Sunday.
They are now four points behind Premier League leaders Chelsea having played a game less, and while Cardiff have deep concerns of their own, Solskjaer is acutely aware of the quality Liverpool possess.
"They have got every opportunity (to win the league)," said Solskjaer, whose team go into the game three points off safety.
"They are in a good position. They have been fantastic the last nine or 10 games, definitely. There are four - Chelsea, (Manchester) City, Liverpool, Arsenal. They all can win it.
"The (Liverpool) front three have pace, power, movement, and I would say Liverpool might be one of the best counter-attacking teams in Europe at the moment.
"The way they suck teams in and just break on them. They run at every opportunity, so you have got to be aware of that.
"I admire the football they play. Direct, counter-attacking football, with quick pace, and every opportunity the ball goes in behind. They have scored so many goals.
"You sit back and look at the best teams in Europe and England, and at the moment Liverpool are in great form."
Cardiff have won only once in their past seven games and are clear underdogs this weekend, but Solskjaer has taken heart from their performance in last Saturday's 2-1 injury-time defeat at Everton.
And he is confident his team can pull off a shock result against Brendan Rodgers' in-form side.
"The performance (at Everton) was a boost," he said.
"Of course, the lads were disappointed. Their heads were down when I went into the dressing room, but you don't allow them to be down after that kind of performance.
"We have got different agendas. We need to get out of the bottom three, they (Liverpool) think they can win the league, no doubt about that.
"I have been in that situation myself. I know Brendan (Rodgers) is talking about they don't talk about winning the league. Of course they think about it. Players start talking, they start thinking.
"For us, our agenda is to get the points we need. In a game like Liverpool we have got nothing to lose. We are at home. We have done it against (Manchester) City, we have drawn with United.
"We want to be a banana skin, yes, definitely. We are in a position we more or less expected. I am not sure if they (Liverpool) expected to be in this position to be able to win the league with eight or so games to go.
"You have got to make it a competitive game. The footballers they have they can outplay any team. You have got to get all the little details right in a game, like this one, and have a bit of luck."