I can replicate this on English Wikipedia too when typing.

This appears to be a bug in the ULS extension which I'm not familiar with. Perhaps using placeholder attribute rather than a label would help here?

Do we want to wait for the new version of ULS or do a short-term fix?

This doesn't seem to be specific to the new position, just an long time existing issue in ULS. More specifically, probably duplicate of T45951: ULS search autocomplete doesn't handle RTL well: doesn't adapt direction, autocomplete text overlaps regular text. It's trying to show automatic completion of the search keyword, with all the issues that comes with it.