Bayern is not doing well in the Bundesliga, while Arsenal is doing better.
This is exactly correct, if you take a look at the head to head between the two team, Bayern have won far more games and if we are to predict this game using that, then the advantage is with Bayern Munich. Having said that, Arsenal have improved greatly since the last time they met Bayern, and even though it sounds strange to say, they (Arsenal) are the favorites in this tie as they have the quality to eliminate Bayern Munich.
The Premier League as Arsenal's main competition and the Bundesliga as Bayern Munich's main competition will be different when Bayern Munich faces Arsenal in the Champions League.
If Bayern Munich's performance in the Bundesliga is not as good as Arsenal's performance in the Premier League, for me it will not have a big impact on Bayern's failure in the Champions League with the intention that Bayern can perform better than Arsenal.
The x factor I mean is because Bayern's experience in the Champions League will be one of my assessments, not because Bayern Munich did not perform well in the Bundesliga or Arsenal performed impressively in the Premier League.
I'm not ignoring Arsenal's performance so far, but in a big tournament like the Champions League, everything can change.