"We have been up against Argentina, we have been up against Brazil, teams with the same stature or perhaps even more stature than Germany," Alfaro told reporters on Sunday.
"They're all candidates for world champions. We faced them and it was tough for us but we pulled it off," he said.
Paraguay returned to the World Cup for the first time since 2010 - when they were narrowly defeated in the quarter-finals by eventual champions Spain - after a qualifying campaign that started badly but was transformed by the appointment of Alfaro in August 2024.
Alfaro led the team to wins over both their neighbouring South American footballing giants.
A terrible start to Paraguay's tournament, when they lost 4-1 to co-hosts the United States, was followed by a 1-0 win over Turkey, in a game when they were reduced to 10 men and their opponents had 33 attempts on goal, and a 0-0 draw with Australia.
That was enough for Paraguay to squeeze into the first knockout round.
Against Germany, the South Americans will be without midfielder Diego Gomez, who is suspended after receiving two yellow cards in the group phase.
Media reports said centre half Omar Alderete was an injury concern.
But Miguel Almiron, another of the team's more creative players, will be back, having served a one-game ban following his red card for covering his mouth in a confrontation during the win over Turkey.
Alfaro, who has previously managed Ecuador and Costa Rica as well as Boca Juniors in his homeland Argentina, said he had compiled a big dossier in preparation for the Germany game but had been limited to one training session for Monday's game near Boston, at the home of the New England Patriots NFL team.
Paraguay captain Gustavo Gomez, speaking alongside Alfaro, also spoke of the importance of playing top South American sides as part of the process of getting to the World Cup.
"Everything we went through and achieved in qualifying - coming up against super-strong opponents like Brazil, Uruguay, Argentina, Ecuador, Colombia - we've been through a lot of pressure situations, and we have overcome it," Gomez said.