Last week's 1-0 defeat to the Gunners left the Reds nine points behind the Premier League leaders and three days later Liverpool suffered their first Champions League defeat of the season in Turkey.
Iraola, in his first campaign as Liverpool boss, admitted that the two losses had hurt as he prepares his team for Sunday's trip to struggling Crystal Palace.
"One week ago in this press conference, we were on a run, everything was in a good place, and we were in a better mood," the Spaniard told reporters on Friday.
"And now, two defeats, it changes, and it has to change. It has to be like this, in clubs like ours. And now we have to react. After two defeats, we need the win against Palace away."
Iraola said that highs and lows were inevitable so early in his reign after succeeding Arne Slot in June.
"When we lose a game everyone is angry but we have to have some perspective and we know in the process there will be ups and downs," said the former Bournemouth boss.
"We are not as bad as we look today, we were not as good as we looked one week ago and we have to have some perspective. This is part of my challenge also in terms of mood for the group."