Wenger's men now face a battle to qualify for Europe's elite competition after the Toffees moved to within a point of them in the standings with a game in hand.
The Gunners, who were challenging for the Premier League title a number of weeks ago, sustained heavy losses to rivals Liverpool and Chelsea in recent months, and Wenger admits that those defeats have taken their toll on his side's confidence.
He told reporters: "Everton were better, sharper and deserved to win. The only time we looked like coming back into the game was in the second half, then we gave an easy goal away.
"It will be difficult to finish in top four but first we have to focus on the quality of our performances.
"I wouldn't question the spirit of this team but we have lost something on the confidence front. We looked disjointed when we had to run after the score. The other big defeats away from home have taken some of the charisma from this team."
The North Londoners face Wigan Athletic in an FA Cup semi-final at Wembley next Saturday, before resuming league commitments with the visit of West Ham United to the Emirates Stadium.