The teenage full-back could be on the move from Real Valladolid before the transfer window closes later this month after impressing in La Liga.
Several clubs hold an interest in Fresneda, but it had seemed that Newcastle were firmly in pole position to secure his signature.
The Magpies have not sealed the deal yet though and now they face competition from Arsenal.
It is claimed that the Gunners now hold a serious interest in Fresneda and have made clear that they are big admirers of the teenager.
Arsenal may prefer to wait until the summer to swoop for the 18-year-old and it is estimated he could cost between £10m and £15m.
Real Valladolid are in the thick of a battle to steer clear of relegation from La Liga and Fresneda is a starter for the club.
They sit in 13th spot in La Liga, but just two points above the bottom three in what is a congested bottom half of the league table.
