England international Jude Bellingham was denied in the first half of the German side’s 2-1 defeat at the Etihad Stadium when Romanian referee Ovidiu Hategan ruled he had fouled Ederson. Replays suggested the decision was harsh.
Terzic felt his players still performed creditably and remained optimistic they could turn the tie around in the second leg next week.
He said: “It’s the Champions League, the quarter-finals and Manchester City and if you make mistakes they will cost you.
“But we are very satisfied with the performance. It’s annoying not to come away with a draw but there are a lot of positives.
“We know Manchester City will play this type of football in every match, so the principles will not change a lot. We know we will have space and have the conviction we can go through.”