Meanwhile, Dortmund's eight-match unbeaten run across all competitions came to an end as they were also beaten 2-0 by Inter Milan last time out in the Champions League.
Schalke have enjoyed an impressive Bundesliga campaign so far this season and, despite sitting seventh in the table, they are actually just two points off surprise league leaders Borussia Monchengladbach.
Despite a shaky start in which they picked up just one point from their opening two games, Wagner subsequently led his side on a four-match winning run to surge up the table.
However, their last two league outings have yielded just a single point as Schalke struggle for consistency.
The former Huddersfield Town boss will expect his team to show far more fight in their upcoming derby against title-challenging Dortmund than they did in their 2-0 defeat to Hoffenheim - particularly as Wagner once managed Dortmund's reserve team.
Dortmund's form before that loss had been strong, however, having last lost a match in August, going on to record an eight-game unbeaten run.
Favre's side are fourth in the league and just a point off the top two as the Bundesliga bears witness to an early title race involving no fewer than nine teams.
They will be hoping to extend their unbeaten streak in the league to seven games as they prepare for a derby clash with Schalke.
Schalke 04 form: WWWWDL
Borussia Dortmund form: DDWDWL
Wagner is experiencing something of a midfield crisis at Schalke, with three central midfield players sidelined with injury.
However, right-back Lukasz Piszczek is back in training in a boost to Dortmund's full-back options.
Jadon Sancho was also restored to the side against Inter after being left out for returning late from international duty and could feature.
Schalke 04 possible starting lineup:
Nubel; Kenny, Stambouli, Sane, Oczipka; Caligiuri, Mascarell, Harit, Schopf; Burgstaller, Matondo
Borussia Dortmund possible starting lineup:
Burki; Hakimi, Akanji, Hummels, Schulz; Weigl, Witsel, Delaney; Sancho, Brandt, Hazard
We say: Schalke 04 1-2 Borussia Dortmund
Expect an intense derby clash between these two, particularly as both are involved in the early title conversation. However, Schalke have dropped off a little in their last two games and that, combined with Dortmund's superior quality in personnel, could see the away side claim a narrow victory.