Pep Guardiola is thought to be a big fan of the German U20 international and has reportedly instructed the powers-that-be at City to make a move for the midfielder before he arrives in the summer.
United are also keen to add some youth to their midfield ranks with Michael Carrick and Bastian Schweinsteiger coming towards the end of their careers.
Dahoud has played in all but one of Monchengladbach’s Bundesliga ties this season, and the one he missed was through injury.
He has managed to score two goals in the league and he has also been credited with five assists.
The fact that he has Champions League experience at such a young age will be another positive for the three interested sides.
He is under contract until 2018 so whoever signs him will not be able to get him on the cheap.