Despite leading twice through Erling Haaland, City conceded late goals to Brahim Diaz and Jude Bellingham at the Etihad.
Dias remains confident that City can bounce back in the second leg at the Santiago Bernabeu.
“Now it’s a matter of belief. How much do we believe in ourselves, how much do we believe we can go through,” he said in an interview with CityTV after the game.
“Obviously we’re aware, we know exactly the game we’re going to play there. We’ve been there before. It will only be about how much we believe in ourselves.
“The good thing, at the end of the day, is that in this team and this Club, if we believe enough in ourselves and if we believe enough that we’re going to win it, we can do everything. And we have enough gun power to pull off anything.
“But we need to believe in it.”