Palace held City to a 0-0 draw on New Year's Eve in 2017 and during a season in which the Premier League champions scored 106 goals. They are 12th in the league after a 1-0 win away at Newcastle last weekend.
Hodgson said: "Well we can. Of course we can. No team is unbeatable and no team poses a threat that you can't possibly deal with but everyone understands how good they are.
"It will be a test and big task for the players. We kept a clean sheet against them a year ago and we're hopeful of doing the same on Sunday."