Barca will have to win at the Allianz Arena on Dec. 8 to make sure of their place in the last 16 if Benfica secure three points in Lisbon against Dynamo Kiev, who are already guaranteed to finish bottom of Group E, on the final matchday.
The last two meetings between Barca and Bayern ended 8-2 and 3-0 in the German side's favour, but Xavi says he's seen enough in two matches since replacing Ronald Koeman to believe winning in Munich is possible.
"What makes me most optimistic is seeing the team playing in this way," Xavi said in a news conference after the Benfica draw when asked about his side's chances of progressing in the Champions League.
"Playing like this we can compete with anyone. Seeing what I've seen [against Benfica], we can go to Munich and win. The positive news is we still depend on ourselves."
Bayern sealed the top spot in the group on Wednesday as they made it five wins from five by beating Kiev 2-0. Barca are second on seven points and Benfica are third on five points.
In the event Barca and Benfica finish level, the Portuguese side would advance with the superior head-to-head record, with the Blaugrana dropping into the Europa League.
Barca would have booked their place in the next round with a win against Benfica on Wednesday, but failed to make the most of their domination in an entertaining encounter at a rain-drenched Camp Nou.
Yusuf Demir hit the bar, Ronald Araujo had a goal ruled out for offside, Frenkie de Jong had a header saved and Memphis Depay wasted two great chances, but Xavi's side were unable to find the breakthrough.
There was almost a sting in the tail when Benfica, who also had a Nicolas Otamendi goal disallowed, saw striker Haris Seferovic miss an open goal after rounding Marc-Andre ter Stegen in stoppage time.
"We were the better side," insisted Xavi, whose first game in charge was a 1-0 win over Espanyol last weekend. "It was a good game. If we had just scored one goal it would have been a great game. In the end, it's a point that feels like much less.
"Being positive, I think we played well. The idea is catching on. We just lacked that goal. This is the Barca we want but we must be more clinical. That's one goal in two games -- and that was a penalty.
"We have to restore the confidence of the players that score goals. I'm not just talking about the forwards, either, but the midfielders that arrive from deep as well."
One plus for Barca on Wednesday was the return of Ousmane Dembele as a second-half substitute. The French forward is out of contract next summer, but Xavi hopes he will sign a new deal.
"He changed the dynamic of the game," the Barca coach added. "He generates fear in the opponent. He created chances. It's a shame a goal didn't come from one of his crosses or shots.
"I've spoken with him and he's happy here. He took a risk playing today because he's not 100 percent; another player wouldn't have done that.
"There was a risk of a relapse, but he surprises you as a person. He's different from what you think. For me, he's an important player. If he's on the pitch, things happen. I hope he renews."