BEIJING—In a defiant response to U.S. Senate approval of a bill that would pressure China to let its currency rise faster, the nation's central bank set the guideposts for the yuan substantially lower on Wednesday and Thursday and warned that the bill could imperil further currency overhaul.

But the Chinese currency finished higher in Wednesday trading as investors took it higher within its tight trading range, underscoring skepticism that the bill will become law, and taking into account the pressures that are pushing Beijing...