UNICODE and SQL

Hallo,

I need to use SQL to insert some language specific characters into tables.
In particular I am using German and Croatian specific characters. The
database is created with UNICODE encoding.
For instance, when trying to run from psql:

INSERT INTO test VALUES (1,'Urlaubslite für nächstes Jahr');

I get the following error:

ERROR:  Invalid UNICODE character sequence found (0xfc7220)

because of 'ü' and 'ä'.

How to do it?
Thanks,
Marco Roda