I just installed Xfce4 and start using its default terminal. Terminal's default character encoding is set to UTF-8. I'm bulgarian so sometimes I work with cyrillic text. Cyrillic characters are rendered, but it's like xfce-terminal is confused by them.
The first line shows these bulgarian letters "фйфоъсжкфт". Of course this is only example, I don't have script with that name. Letters overlap. This is incorrect!
The second line shows what happens when I hit Enter .
The third line shows what happens when I keep pressing Backspace key. Part of the prompt is erased.

In the last line I pressed "up" once to envoke shell history. Question marks suddenly appeared.