The Clarets' results so far this campaign have been disappointing after they over-achieved last season with a seventh-place finish in the Premier League.
Sunday's 1-0 loss at Molineux flattered Dyche's side, who were indebted to goalkeeper Joe Hart for keeping the scoreline respectable as Wolves had 30 shots on goal during the game.
Burnley have lost their last four Premier League games – the last time that happened the Clarets were relegated from the top flight, finishing bottom of the table in 2015.
However, Dyche believes his team are not far away from rekindling their form.
"There's work to be done on the training ground but a lot of it just loosening slightly," said Dyche.
"It's roughly the same group that got us to seventh in the Premier League last year, we're not a million miles away but the margins are so fine for us.
"The biggest thing of all is to free the focus of the players. When the players are playing with confidence everything flows a bit easier but to bring that flow back you have to be strong physically and mentally. We aren't far off."
For Wolves, back-to-back 1-0 victories either side of the international break have propelled them into the top half of the table, coming on the back of holding champions Manchester City to a draw.
Asked if he was surprised at how well Wanderers have adapted to the top flight, head coach Nuno Espirito Santo said: "It is not a question about being surprised, it is dealing with the reality.
"We've come from a very tough league last season in the Championship and we won the competition, it is a very tough competition. But that experience gave us enough to come here and compete so we are very glad for that."