Gunners boss Unai Emery is determined to recruit a winger after January’s loan deal for Barcelona’s Denis Suarez proved a total flop.
Wilfried Zaha reportedly remains his No.1 target, but the chances of Arsenal being able to afford Crystal Palace’s talisman are remote.
And Emery is reportedly concerned that deals for his backup options have both now stalled.
Carrasco appears desperate to return to Europe after spending 18 months with Chinese Super League club Dalian Yifang.
But according to The Evening Standard, the club are now unsure whether they want to keep or sell the player.
The news has left Emery in a dilemma that even his pursuit of Fraser may not be able to solve.
The Scotland international was a revelation for Bournemouth last season, racking up 14 Premier League assists from the left flank.
The Gunners have been hoping that Fraser would take affirmative action to force through a move to Arsenal in response to their interest.
But there are no signs of him doing so yet and Bournemouth are more than happy to keep the 25-year-old.
Despite the risk of him leaving for free next summer, the Cherries are demanding £25m for the star – more than Arsenal wish to outlay.
The Emirates outfit have also been linked with a move for highly-rated Lorient attacker Alexis Claude-Maurice.
But he has since publicly stated his desire to move to Borussia Monchengladbach.
Emery must now decide whether to return to the drawing board in search of fresh transfer targets.
The Spaniard’s alternative option is to dig deeper into his reported £45m warchest.
However, the report adds that the moves for Carrasco and Fraser are not considered dead.
But Arsenal are likely to have to dip further into their summer budget than they originally hoped in order to complete either deal.
And with time running out before Emery’s side jet off on their pre-season tour next month, the Spaniard will be concerned there looks to be no new signings on the cards anytime soon.