The bus terminal is located around 1km South of the city center, a bit hidden behind the large sports stadium on Bernardino Caballero.
There are frequent buses from Asunción 5 h and Encarnación 4 h in the South.
Border Scams
If you are transiting Paraguay not coming back across the same border the same day, you will have to go to the Paraguayan customs office just past the bridge. Citizens of Mercosur are granted entry just with their ID: others need a passport. The stories of bribings and scams in the Paraguayan customs offices are frequent. Make sure that you get everything that you are supposed to get when they check your passport and/or ID.
Those that handle them the ID should receive back, along with the ID, a formulary with the arrival stamp in it. If you're with the passport, you'll receive only the usual stamp on the page.
A common trick is not handing the stamped paper back with the ID; that way you cannot prove having legally entered the country. If so, you'll certainly be asked for money for the exit to be granted. So make sure you get the stamped paper at the border.