The Bundesliga leaders host Zoran Mamic's side in the Champions League group stage on Tuesday after they shocked the Gunners in their opening game.
Guardiola believes Bayern's form is steadily improving this season but is under no illusions as to the challenge which awaits his side at the Allianz Arena.
"Every day and every week is important. The most important thing now is Dinamo Zagreb," he said.
"You'd normally think Arsenal would win in Zagreb, but then you watch the game and you see straight away why Dinamo won. They are very organised, very aggressive.
"They have very technical players and we need to approach the game with great seriousness.
"They played well in defence, with their players showing discipline by maintaining their shape. Forty-five games without losing... this must be a really strong squad - it won't be easy.
"It's a great opportunity to bring us into a good position for the game against Arsenal. You have to win your home games to get ahead.
"I have a lot of confidence in my team. Our development is good, we're getting a little better every game."
Guardiola revealed that Arturo Vidal is struggling with a minor knee complaint and Sebastian Rode may also miss the Dinamo clash, but there was better news regarding the returns of Franck Ribery and Arjen Robben
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