The Wallabies, hit hard by injuries to 10 Test players including Stephen Larkham and Stirling Mortlock, crashed to their seventh successive defeat with a 26-16 loss at Twickenham on Saturday.
But Ireland's 45-7 defeat by New Zealand will have given Australia the belief they will soon end the worst sequence of results in their history.
O'Sullivan is aware his side will face a team determined to end a barren run which began against South Africa in July and also knows opposite number Eddie Jones expects success in Dublin.
"Australia are capable of beating anyone on their day. It's been hard going for them because they've had their injury problems but they still have some great players," he said.
"Australia will be disappointed after losing to England. Eddie Jones will come to Dublin with the view of turning things around. But we also have a lot of work to do after Saturday's match.
"Next weekend is going to be a tough one, whatever happened against New Zealand. Australia are a different bag of hammers but still very dangerous opponents."
Skipper Simon Easterby suffered a perforated lip against New Zealand and left the pitch in the 73rd minute but O'Sullivan is confident he will be given the all-clear for Australia and otherwise there was a clean bill of health.
The biggest challenge for O'Sullivan lies in picking his team up for the second Test of their Autumn schedule with New Zealand's immense display certain to leave some mental scars.
"New Zealand used different teams for Wales and then us but both performances were world class. They have phenomenal strength in depth. They can only put 15 out at a time though, which is helpful," said O'Sullivan.