Burnley's only Premier League season ended in relegation in the 2009-10 campaign and Dyche will hope to be active in the transfer market to avoid a repeat.
But the manager acknowledged the club would be limited in the players they can bring to Turf Moor.
"There have been occasions where it's been mooted around that I'm not interested in European players and that's absolutely not the case," Dyche told The Lancashire Telegraph.
"At my last club at Watford we didn't have the finance to recruit properly from Europe, and we're similar here now.
"We have a recruitment department, we've worked hard to build it over the last year if not 18 months.
"But to go into Europe... that's increased costs in wages, increased personnel, and all of those costs have to be paid for.
"So we have to look at the English market first because we know it as a staff and our recruitment people know it.
"The reason why the European market has opened up to a lot of clubs is because they put a lot of resources into recruiting from that market and that means a lot of personnel on the ground watching game after game, player after player.
"We haven't been in a situation to be able to afford to do that so therefore it does narrow our market slightly."