No defecation. Urination only. Her need to urinate came from an intense sexual desire that was marred by repression.
This may be revealing too much about myself, but whatever. When I was young, I had an extremely high libido, and my youth prevented any type of sexual contact with anybody else, of course, leaving me feeling an intense and unsatisfied "hunger" if you will; I specifically remember soon before I discovered masturbation, I had seen something that left me wildly turned on, but without any knowledge of how to release that pent up energy, I urinated completely out of the blue, the rush of the act felt almost orgasmic.
It felt so wrong but so good. I couldn't help it. I'm pretty sure Erika went through something similar while peeping on the couple making love in the car. She was so sexually pent up and repressed that her body had to figure something out to release her energy, which gave her the urge to urinate instantly, which, she did

It was noted before that her urination will be more intense given that she cuts herself in the same place. I think it's more than having wires crossed. I think so-called 'ordinary' people feel have sexual urges related to urination and defecation.
A bird sings and the mountain's silence deepens.

We only saw her pissing after she got excited by the couple in the car. I think it was meant to show how her wires were totally crossed and her sexual reactions were in no way normal (even 'peeping Tom' perverts will just watch and at most have a quiet wank!)

I thought it was pee and not female ejaculate. When checking her shoes I thought she was checking them because she knew her mother would investigate her clothing to see where she had been.

She was urinating. You can hear the 'tinkle'. When he says sht, it's a natural reaction, you step in something gross and say ah sht! She was checking her shoes to make sure she didn't have any of it on them.

Could also be female ejaculation. That's what I assumed, as she seems very turned on prior to it.

Yeah, I thought she was urinating too. I think it's some sort of fetish.
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She still urinated all over where she was standing/stooping, & wanted to make sure it wasn't on the cuffs of her pants.

I can think of two thhings: when the guy came out of the car he stepped on to something that made him say "merde!". The other was when she was going into her building she checked for her shoes soles. Mostly, you do that for a sh.tty reason
If every animal had wings the sh*t of this world would be evenly shared

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masturbation.
Real good first half, flimsy second, but Huppert was that good to keep this character's sick logic intriguing.
It's the little moments right when she compulsively pulls her pants down in this scene or as soon as she decides to plunge the knife that show what a committed performance this was to inner torment.

either way - why was she doing a piss?

I never saw any indication that she was taking a sh!t. Where did you get that?
Some velvet morning when I'm straight