"We all know the Dutch have excellent players with a lot of quality," the Portuguese Federation reported Varela as saying.
"We will have to play our game and essentially look to ourselves - but also beware of an opponent which is wounded," he added.
The Dutch, initially expected by many observers to make it through the 'Group of Death' with Germany, are all but heading for the exit after losing to the Danes and the Germans.
Varela meanwhile spoke up for Cristiano Ronaldo, criticised for missing two good chances against the Danes prior to his own late winner.
"Ronaldo has already shown his worth. He has nothing to prove to anyone," insisted 27-year-old Porto star.
Portugal are hoping to see off the Dutch as they - and the Danes - try to make up a three-point deficit on Germany, to whom they lost their opening match.