Swedish character sync issues

Hi! I’m somewhat new to Nextcloud and got som issues syncing Swedish characters, mainly “Å, Ä, Ö, å, ä and ö” characters in file names. In the client i get:

Server replied

"500 Internal Server Error" to "PUT https://mydomain.com/remote.php/dav/files/account/directory/Helvetes Jävlar.txt" (Skipped due to earlier error, trying again in 24hour(s))
directory/Helvetes Jävlar.txt

(Note: I shorted the actual dir with “directory”.)

On the server side of things i get:

I really have no idea what might be wrong, but then of course I’m new to using nginx and pgsql.

My setup is as following:
OS: Ubuntu server 20.04 LTS
DB: PostgreSQL 12.2
PHP: 7.3.17
Nginx: 1.17.10

Some pointing in the correct direction would be great, i have checked PostgreSQL encoding and it says “UTF8” which i suppose is correct. i have also checked php and utf8 is set

default_charset = "utf-8"