The pace bowler, with 499 Test victims under his belt, said that England were oozing self-belief in the one-day matches at the start of the Australians' tour but had started to lose confidence with the tourists' crushing wins in the last two games.
"Body language is the biggest key and that is one thing Australia do so well," McGrath said.
"During the last two one-dayers [at Lord's and The Oval], it was obvious to see that their body language had dropped. It was so quiet out there [on the field]. That is a sign that it won't take much to get on top of them.
"It is easy to get aggressive when things are going well. They believe in themselves more than in the past. They have world-class players, but whether they really believe they can beat us, we will have to wait and see.
"In the back of their minds, they will know we probably had the edge over them in the one-dayers."
McGrath, whose use of pre-Ashes mind games is as predictable as his bowling is accurate, also said that the Australians had devised a plan for England's newcomer, Kevin Pietersen.
"It has been good to see the way Pietersen plays before the Test," he said. "I think he is very much suited to the one-day game. We have seen a few things to enable us to make a plan of how to bowl to him that we think will be successful."
McGrath also feels England rely too heavily on certain players, notably Marcus Trescothick, Andrew Strauss, Michael Vaughan and Steve Harmison. He believes England need to ensure that Harmison is in the right frame of mind since he was disappointing in South Africa last winter.
"England had a far better team and should have beaten South Africa, but Harmy didn't perform as well as I thought he would," McGrath said. "Matthew Hoggard bowled well, but they won't get away with relying on just two guys. If they do, we will win and win well."
McGrath went on to question Harmison's self-belief. "I thought he started one-day series very well but in the last few games he didn't seem the same so whether his confidence has dropped a bit, I'm not sure."
While McGrath's confidence is clearly sky high, the England spinner Ashley Giles insisted his side are no longer in awe of Australia.
"We certainly aren't afraid of them," he said. "We will go toe-to-toe with them and, while we know they are a good side and capable of beating us, we will take them on. All the players have said there is a lot less baggage than in England teams in the past. There is a lot less history. There aren't many guys who have been used to losing to Australia."
Yet Giles admits that England have to be at their peak to win. "If we play like we did against South Africa, then Australia will thrash us," he said. "But if we play as we did last summer, we have more of a chance."Reuse content