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In many aspects, for now, Arsenal deserve to be the favorites.
I think it's not just about their ability to put up a tough fight against a team like Manchester City, but it must be admitted that Arsenal have indeed developed into a better team under Arteta. The only similarity between the two is that they don't have a sharp striker, but collectively, all the players in the squads of both teams have the ability to score goals with various variations.
I don't really place Arsenal as favorites in that match, but I agree that Arsenal has a good chance of winning in their home match. Arsenal must be able to take advantage of home advantage to win, but PSG is not an easy team to beat. There are many good players in Luis Enrique's squad who can also score goals and win matches, so both teams' chances of winning still have to be considered.
However the match ends, both of them still have a long journey (6 matches remaining) to reach the last 16.
That's right, they need to win it to increase their chances of qualifying for the last 16 automatically.