For me he should have one more chance to prove his worth in Europe and qualify out of the group stage and if he fluffs it he is out, he will be managing the club next season I believe this to be almost certain as I don't see us finishing outside the top 3 and of course we have n't lost yet so the Title is ours if we play to our ability.
However saying that even if he wins the PL, EL and the Fa Cup this year I would still sack him if he cocked it up in the group again. Once he gets out of the group then providing we finish in the top four he stays as manager, although I would review his managerial performances in the knockout stage and if it pointed against progress though of course considering who our opponents were then I might be inclined to sack him even after a last 16 exit in the competition, quarter finals guarantees his future tenure unless he does something on the level of playing silva at LB or Zableta upfront.
How do the board see the situation? Surely 3 chances to qualify would be enough any failure on the 3rd time is unacceptable regardless of group opponents.