Kylian Mbappe scored twice in Monday's (Tuesday AEST) Group I clash that was delayed for approximately two hours by severe weather. In Iraq's first group match, Erling Haaland struck for a brace in Norway's 4-1 win.
The 2007 Asian Cup winners finish group play against Senegal on Friday in Toronto.
"For me now, it's all about Senegal," the former Socceroos boss said.
"With the extended, you know, the playoffs that eight third-placed teams go through, you know, we've still got a chance.
"We have to get over this game quickly. And when I say we've got a chance, we've got to go out there against Senegal and beat Senegal. And then we've got a chance of getting one of those eight spots still."
Arnold thought the performance before halftime was good, despite Mbappe's opening goal on a powerful effort from long distance.
Then came the prolonged wait for the second-half restart, followed by a dreadful goal-kick error that gifted Mbappe and the French their second.
"Well, you know, there's nothing I could do except I showed probably a little bit longer footage of the first half at halftime to show them where France was obviously hurting us a little bit," Arnold said.
"But it was more the players just had to sit and relax, and keep relaxed and then get themselves obviously ready when we went back out there. But as I said, it's a unique experience.
"For them all, it's just a disappointing thing. The way we played against Norway and a mistake hurt us. And today, I felt that straight after halftime, we were well in the game and another mistake hurt us."
Arnold had nothing but positive things to say about Mbappe.
"He's an incredible player," Arnold added.
"His speed is unstoppable. And that's why, you know, we defended a little bit deeper than I always do because if you leave space in behind and Mbappe's that quick, then he'll destroy you.
"Haaland is scoring goals, and (Lionel) Messi's obviously scoring goals, and Mbappe. So it's going to be a very good competition between those three for the leading goal-scorer."
