Wolves knocked off local rivals Aston Villa to secure the Brazilian’s signature with a deal that includes an obligation to buy at the end of the season for a fee that could rise to £35m.
Cunha who is now Julen Lopetegui’s first signing since taking over at Molineux, will join the club from January 1 subject to work permit approval.
Confirming the signing, Wolves said in a statement;
“The Brazilian international flew to the UK and completed his medical earlier in the week, finalising a loan move which will automatically become a permanent deal until 2027, should certain clauses be triggered.”
Cunha has started only two games in La Liga this season and has registered two assists in 370 minutes. He has eight senior caps for Brazil and has made 11 appearances in all competitions for Atletico Madrid this season.