Despite emerging from the festive programme in fourth spot, manager Sven-Goran Eriksson has been reluctant to offer any firm targets for his team, still believing it would be a 'dream' to remain where they are at present.
However Dunne, whose outstanding contribution to City's recent form saw him crowned club player of the month, does not see anything in Liverpool - who scrapped out a goalless draw at Eastlands last month - to make him feel scared.
"We came off the pitch against Liverpool and thought they were not that much better than us," Dunne told the club's website.
"We all took some confidence from that.
"Last year it was Arsenal that people thought would be the team to catch. But this year, Liverpool are the team who have not pulled away from the rest of us. They are a side the likes of ourselves, Everton and Aston Villa will be trying to catch.
"We are all in there and we have as much chance as them of getting into that fourth position."