The reigning English champions struggled at the end of 2024, losing nine out of 12 matches between October and December.
However, the Citizens appear to have turned things around in the new year with strong performances, except for their 4-2 loss to PSG in the Champions League.
After City’s recent wins against Chelsea and Club Brugge, the defender says his team is still one of the best in Europe, but they need to prove it in their upcoming matches.
"If we all work together on the pitch, I think we're still one of the best teams in Europe but we have to prove it match after match," Akanji told Flashscore.
"We beat Chelsea (last) weekend. I think Chelsea's been a really good team this year and I think it was a really good win from our side, we showed a good performance.
"Obviously, the performance before against PSG wasn't as good as we wanted it to be but I still think we gave it our all."
Although they’ve dropped to fourth in the Premier League, Pep Guardiola’s side will be aiming for a win at Arsenal on Sunday to extend their winning streak to three matches.
The Swiss player emphasizes the importance of the game at the Etihad Stadium, noting that the mood at City has improved due to their recent strong performances.
He continued: "We have to go match by match, game by game, we've got Arsenal next and we've got to recover really well now.
"It's an important game for us. It won't be easy for us away, so we've got to recover well after (the Club Brugge win) and we've got to be ready for the challenge."
On the atmosphere, he stated: "I think it's good always when you get good results, the mood is better than when you lose games, obviously.
"I hope we can still keep it going. I hope we can do everything together. I hope the injured players that we have are coming back and stay healthy then we're going to be even better."
Manchester City came from behind to secure a 3-1 win over Belgian giants Club Brugge at the Etihad, earning a spot in the competition's playoff round, where they will face Real Madrid.
When asked about his team's performances in the competition, he added: "I think we started really well. The draw against Inter Milan was okay. They're one of the best teams that we faced.
"And then we got two wins, so we were at eighth at seven points after three matches, which was really good. But then, obviously, we had a couple of results that were way under our expectations.
"We only got one point out of the next four matches, so we had to win (against Club Brugge) to get into the next round.
"That wasn't the way we wanted it to be, but here we are right now, and I'm still confident we can beat whoever comes next.
"I don't know what's going on in their head. I think we can beat every team in Europe, so whoever comes, we're ready for the challenge."
This European blockbuster will be the fifth two-legged tie between the two clubs in the last six seasons, with each side having progressed in two of the previous four since the 2019/20 season.
Last season’s meeting ended in a penalty shootout at the Etihad, with Carlo Ancelotti’s side triumphing and going on to lift the trophy.
The first leg at the Etihad will be played on Tuesday, February 11th with the second leg a week later.
