The west Londoners want to sign a right-back during the coming January transfer window and have identified Cedric as their preferred target. Both a loan, with an obligation to buy, and a permanent deal is being considered.
Cedric is a long-term target for Fulham with interest being driven by manager Marco Silva, who previously worked with the defender at Sporting eight years ago.
Fulham, though, face competition from both Atletico Madrid and Bayer Leverkusen for Cedric.
All three clubs have been in touch with Cedric’s representatives and formal talks with Arsenal are expected soon, with Fulham at the front of the queue.
Arsenal are yet to decide if they will sanction an exit for Cedric next month, with manager Mikel Arteta previously describing his squad as short.
Cedric joined Arsenal from Southampton four years ago, initially on loan, and has made 59 appearances.