What should you do?

Your answer is correct because slowing down to a walking pace and remaining ready to brake is crucial in this situation. In the image, there is a child near the parked cars and a pedestrian on the sidewalk, both of whom could suddenly enter the roadway. Parked cars can also obscure your view of other potential hazards like children or animals stepping into the street. By reducing your speed significantly and being prepared to stop quickly, you increase safety and comply with German traffic rules that emphasize caution in areas with limited visibility and potential pedestrian activity. Continuing driving as before would be unsafe and against these principles.