Carlo Ancelotti has described Pep Guardiola as a "genius" ahead of Everton's meeting with Manchester City at the Etihad Stadium on New Year's Day.
Ancelotti has had an immediate impact at Goodison Park since being drafted in to replace Marco Silva in the hot seat on December 21.
Everton recorded a 1-0 home win over Burnley on Boxing Day, before beating Newcastle 2-1 at St James' Park two days later - moving clear of the relegation places in the process.
City, meanwhile, have had to watch Liverpool extend their commanding lead at the top of the Premier League, with a 3-2 defeat at the hands of Wolves on Friday marking the latest setback in their pursuit of a third successive crown.
Questions have been asked over Guardiola's future at the Etihad amid the Blues' struggles this season, with his current contract set to expire in the summer of 2021.
City managed to ease some pressure on their head coach with a 2-0 home win over Sheffield United on Sunday, but they will be expected to back that result up with another victory against a resurgent Everton.
Ancelotti says that he and Guardiola have a "lot of respect" for each other, with it his belief that the Spaniard remains a "fantastic manager" due to his insatiable hunger to achieve "something special on the pitch".
"Pep is a fantastic manager," the Everton boss said at a press conference.
"I have a good relationship with him. Not a lot in games but we see each other sometimes at conferences. We have a lot of respect.
"At certain points, he is a genius because he is always trying to do something special on the pitch."
Ancelotti added on the challenge City will pose to his side: "Manchester City will be a fantastic test for us to see where we are. It is a really strong team but we have confidence. The moment is good for us.
"We have to be happy to compete with the top team in England and also in Europe."
Everton are now 10th in the Premier League table, five points adrift of the European places and 15 behind fourth-placed Chelsea, with a stronger second half of the season expected under Ancelotti.
The Italian tactician has been tipped to add to his ranks when the transfer market reopens, a possibility which he went on to acknowledge when asked to address ongoing rumours.
"The market is not open yet - it opens tomorrow! There are a lot of rumours," Ancelotti said. "That is normal. Everywhere in the world, it is like this. In Italy, it is the same.
"After the 5th of January, we are going to have a meeting with the club and we can talk if it is possible to try to improve this squad.
"In my opinion, it is a good squad. Some players I didn't know really well but now we are training, I have a better relationship and know them better.
"Maybe after the 5th of January, we can discuss this."