Alvarez shocked the LaLiga giants during the 2026 FIFA World Cup as he publicly declared his desire to move on with Barcelona the preferred destination for the Argentina international.
However, amid a furious war of words between the two Spanish clubs, Atletico confirmed their refusal to sell to Barca and Alvarez was unconvinced over a move back to the Premier League.
Arsenal's interest in the former Manchester City forward has not gone away and Mikel Arteta is plotting a fresh move at the start of 2027.
Reports from TEAMtalk claim the 26-year-old remains unhappy at the prospect of continuing at Atletico for the long-term and Los Rojblancos are willing to negotiate with Arsenal.
Crucially, sources close to Alvarez indicate he's also now open to the idea of a move to North London, if Arteta can get close to Atletico's €120M valuation in the mid-season market.
Alvarez has played a limited role for Diego Simeone so far this season with no LaLiga starts and zero goals scored.