The problem here is that the Regulation defines 'exceptional circumstances' very poorly. It is mentioned twice in the Preamble:
(12) The trouble and inconvenience to passengers caused by cancellation of flights should also be reduced. This should be achieved by inducing carriers to inform passengers of cancellations before the scheduled time of departure and in addition to offer them reasonable rerouting, so that the passengers can make other arrangements. Air carriers should compensate passengers if they fail to do this, except when the cancellation occurs in extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.
and
(14) As under the Montreal Convention, obligations on operating air carriers should be limited or excluded in cases where an event has been caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken. Such circumstances may, in particular, occur in cases of political instability, meteorological conditions incompatible with the operation of the flight concerned, security risks, unexpected flight safety shortcomings and strikes that affect the operation of an operating air carrier.
However the preamble isn't actually part of the Regulation, although the courts have referred to it in their judgements - reflecting what they believe the
intent might have been.
Extraordinary circumstances is only mentioned once in the Regulation itself in Article 5, dealing with cancellations paragraph 3.
An operating air carrier shall not be obliged to pay compensation in accordance with Article 7, if it can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.
Now in your specific case if the flight is considered to have been delayed, compensation is not applicable. If the flight was is considered to be cancelled compensation would be applicable unless squeezy can prove the cancellation was caused by extraordinary circumstances.
I realise that the media has picked up on the ECJ judgement related to an AZ flight from VIE where they claimed a technical was an extraordinary circumstance. The ECJ ruled that, in this particular case, that claim was not valid. The aircraft was returned to service late out of a regular maintenance check resulting in the cancellation. They were of the view that a delay in return from regular maintenance could have been avoided if all reasonable measures had been taken. The judgement doesn't mean all technical faults don't qualify only those in the circumstances described. This hasn't made the situation any clearer but if you read the media you would believe that you are going to get compensation if your flight is cancelled for any technical reasons.
Hope this helps.