UEFA Champions League qualification is out of the question for Dortmund, having flirted with relegation during the early stages of the 2014-15 Bundesliga season, but participation in Europe's second-tier club competition remains a slim possibility.
Dortmund find themselves eight points adrift of sixth-placed Augsburg, who occupy the final Europa League spot with nine matches remaining.
However, the momentum generated following four successive league wins has come to a complete halt in recent weeks.
After playing out back-to-back goalless draws against Hamburg and Cologne, Dortmund crashed out of the Champions League at the hands of Juventus 5-1 on aggregate during the week - a competition that offered Jurgen Klopp's men some joy amid their Bundesliga woes.
Zelic, who won the 1994-95 Bundesliga title during his three-year spell with Dortmund, fears Wednesday's 3-0 drubbing at home to Juve could derail their European fading hopes.
"There is a lot of individual quality in the team where you can go on a run and win five or six in a row. But the result against Juventus is demoralising," the 43-year-old Australian told Perform.
"I thought they would go on a run that would get them at least a UEFA Europa League spot because they were doing so well.
"Obviously after the winter break they drew with Leverkusen then they had that disaster against Augsburg at home but they had gone on a really good run, which was killed with these results against Cologne and Hamburg, where they should have got points.
"I was kind of thinking if it would be great if they could at least scrape Europa League but these last couple of results have taken the wind out of it all.
"I hope [the Juventus] result does not kill them mentally because they were so poor."
