The Canadian Hurricane Centre says the storm is expected to intensify to hurricane strength Wednesday night as it moves northeastward up the East Coast of the United States.
The forecaster says a trough of low pressure will be moving east from the Great Lakes, guiding the storm towards Atlantic Canada.
It says the nature of the trough will affect Arthur's intensity and path, ranging from direct rain and wind to a well-offshore storm with some rain.
Hurricane watches have been issued for parts of North Carolina's coast, while tropical storm watches are in effect for parts of Florida and South Carolina.
The Canadian Hurricane Centre says it is closely monitoring weather patterns.
"The nature of the trough approaching from the Great Lakes will make all the difference in Arthur's intensity, track and structure," it says in its latest statement of the storm issued Wednesday morning.