Pep Guardiola's men were just minutes away from booking their spot in a second successive Champions League final, but endured a stoppage-time collapse as Real Madrid pinched their place in Paris.
With City facing yet another European failure, Howe is expecting a backlash from the defending Premier League champions when his Newcastle side visit the Etihad on Sunday.
When asked how Man City may react to Wednesday's collapse in Madrid, Howe said: "Well, it can work both ways, can't it? You can be emotionally affected for the positive or the negative, you don't know.
"From our perspective, we will 100 per cent prepare for the best Manchester City and in that respect, we have to be the best Newcastle we can be."
The Magpies manager admitted the Citizens were unfortunate not to prevail in Spain, but is also cautious of Guardiola's ability to re-focus his players.
Howe added: "It was a very difficult moment for them, I'm sure, because with very little time of the game remaining, you're thinking that they've gone through, and they had chances to extend that lead.
"It just goes to show the beauty - not in their eyes - but the beauty of football in the fact that it's so unpredictable, the game is never up until it's over.
"I thought they were extremely unfortunate. When you go away to Real Madrid, you know how difficult that game is and I thought they got a lot of aspects of their game right. Unfortunately, they go away and exit the competition.
"I know that will be painful for them, but we know they've got one of the best managers in the world to re-group and inspire them to come back again, and that's what we have to be prepared for."
Newcastle will be eyeing their fifth win in six games when they visit the Etihad. The Magpies haven't won away against City since their 2-1 triumph in 2019.