While the two sides will continue to discuss a contract extension, at this point, all signs point to Callahan being shipped out of town by the deadline.
Multiple reports on Sunday suggested that a trade involving Callahan is imminent, with some linking him to the Tampa Bay Lightning in a trade for Martin St. Louis.
However, both TFP and the New York Post reported on Sunday that a Callahan swap for St. Louis was not in the cards.
Callahan is scheduled to become an unrestricted free agent July 1 and is seeking a seven-year contract worth more than $6 million and closer to $7 million per season.
The St. Louis Blues, Vancouver Canucks and Boston Bruins are also interested in Callahan, among other teams.
Meanwhile, contract negotiations between the Rangers and defenseman Dan Girardi have also hit a wall.
According to the Post, the Rangers have informed other teams that they are officially willing to trade him.
The Anaheim Ducks, as TFP reported last month, have shown significant interest in Girardi and will resume trade discussions shortly, if they haven't already.