The Scot also had strong words for his defence, which has been hit by injuries, warning them that they need to improve if the club are going to keep moving up the table
Dalglish returns to Goodison Park for the first time as Liverpool manager since the famous 4-4 FA Cup draw which proved to be his last game during his first spell as manager at Anfield.
And instead of stoking the flames before the eagerly anticipated match, he decided to warn his players about the threat posed by the Toffees.
“Moysie has done a fantastic job and we've got a great deal of respect for David Moyes and also for the football club," Dalglish told reporters.
"They have done well and were unfortunate to have to go to Manchester City last week having played extra time on the previous Wednesday night, not having the benefit City had of making wholesale changes.
"They put on a very resilient performance even though they lost but last year they won 3-0 so we know they will be competitive and we have to match it.
"They will play to their strengths and we will play to our strengths.”
Dalglish also had strong words for his defence, who have struggled away from home, conceding five times in three matches with the Reds losing on two of those occasions, notably a 4-0 hammering at Tottenham Hotspur.
Whilst denying that Liverpool had a problem, the Scot said there was still room for improvement amongst the back five.
“I wouldn't say we're worried about it," he added.
"It's something we've got to continue working on but if we keep scoring more goals than the opposition then fine.
"But it's always nice to have your opposition with a nothing after their name, isn't it?
"Last week against Wolves we might have been under pressure a little bit and got a couple of tackles in around the box but for me we had by far the greater and most chances in the game.
"It looked more likely that we would have extended our lead than lost it.
"If you keep scoring goals, it makes it more difficult for the other team, but certainly losing not goals makes it a bit easier for ourselves as well as scoring at the other end.
"If you want to get points, then it's helpful not to lose any but I wouldn't say we've got a problem with it."