The Ruhr valley club went into Saturday's league clash against Bayern in top spot but suffered a 4-2 defeat that put Bayern two points ahead of them with eight matches left.
"Everyone was disappointed on Saturday evening but on Saturday evening we also said we are now looking ahead," Terzic told a news conference.
"There is absolutely no reason to be negative or pessimistic going into the next tasks. We are one of the most in-form teams not only in the Bundesliga but in Europe."
"That was our first defeat (of the year) in the Bundesliga and we will now battle for a spot in the German Cup semi-finals."
Dortmund, who were eliminated by Chelsea in the Champions League Round of 16 last month, started the year with eight straight league wins. They have since won just one of their last three, having also drawn 2-2 against Schalke in the Ruhr derby.
Terzic will be without defender Nico Schlotterbeck (23), ruled out for several weeks with a muscle injury picked up in Munich, while forward Sebastien Haller (28) is doubtful with a minor knee injury.
"We will decide tomorrow on Sebastien. We showed this season that we are quick learners and can apply the things quickly," the coach said.
Dortmund are still in the running for two titles but Terzic said the German Cup, which they last won in 2021, looked like the best bet for silverware.
"The Cup is the shortest way to a title," he said. "We want to win the Cup and if we want to win it we have to take on big challenges. The next one is waiting in Leipzig tomorrow."