The Kingsclere trainer favours running the three-year-old over two miles for the first time in the Group 1 contest on July 30 – rather than the Princess of Wales’s Stakes at Newmarket on Wednesday.
Meanwhile, he has confirmed Beat The Bank is on course for the Sussex Stakes – the blue-riband event of the five-day Qatar Goodwood Festival.
After filling the frame on his opening two starts this season, Dashing Willoughby won the Group 2 Queen’s Vase at Royal Ascot.
That was the son of Nathaniel’s first triumph since his winning Wolverhampton debut.
Balding said: ‘Dashing Willoughby has got an entry in the Goodwood Cup and one in the Princess of Wales’s.
‘I’m sure he would stay two miles and the three-year-olds get a healthy weight-for-age allowance, which makes the Goodwood Cup quite attractive.
‘You are taking on the best stayers but given the prize money, I would think that is the most likely option.
‘He certainly handles ground with ease in it well but I would think over two miles quicker ground wouldn’t be a problem.’
Dashing Willoughby’s stable-mate Beat The Back was second to Lord Glitters in the Queen Anne Stakes at Royal Ascot last month.
The five-year-old son of Paco Boy is set to return to the Berkshire track on July 13 to defend his crown in the Group 2 Fred Cowley MBE Memorial Summer Mile.
He will then head for the Sussex Stakes on July 31 – after finishing fifth in the Group 1 content on the South Downs last season.
Balding added: ‘Beat The Bank will probably go back for the Summer Mile, then on to the Sussex Stakes. He seems in good form.
‘He won the Summer Mile last year, so he will have to carry a penalty.
‘But as long as he is in good form, that is where we will go.
‘He has run well in the Sussex Stakes before, so it seems silly not to go back there afterwards.
‘There are lots of options over a mile and a quarter for him after that.’