The outlook for the Chinese yuan is "very positive" and the currency is stabilizing after dropping by over 10 percent from a year ago as a result of the China-U.S. trade war, according to Jimmy Zhu, chief strategist at Fullerton Research.

In an interview with CGTN, Zhu said that currency is being supported by key indicators such as capital flows, foreign exchange reserves and China-U.S. interest rate spread.

"The outlook for the Chinese Yuan remains very positive at this moment. Despite the trade (war) sentiment, the actual economic data around the world is much better than what the market expected. All these will continue to support the yuan in 2020," he said.

China has launched a national campaign to stabilize six aspects of the economy: jobs, finance, foreign trade, capital inflows, investment and market expectations. That means one of the foundations is a stable yuan amid trade tensions and global economic headwinds.

While the market consensus is that without any surprises in the trade war, China's economic health is enough to keep the yuan stable at this point but uncertainties remain.

Zhu warns that the market will be on the watch for developments in the U.S. and Europe.

"The Federal Reserve interest rate expectations can be well reflected in the U.S. two-year bond yield. When the two-year bond yield drops, it means the market expects the U.S. central bank to cut the interest rate. The Chinese yuan weakens.

"Another is the European economy on the yuan. If there's more monetary stimulus from the ECB (European Central Bank), the euro will continue to drop, and this will weigh on Chinese yuan."

(CGTN's Xia Cheng contributed to this story.)