What is the right course of action now?

Your answer is correct because in a situation where you might be overtaken closely or where the traffic environment is potentially hazardous, reducing your speed helps increase safety by giving you more time to react. Additionally, being prepared for an emergency braking maneuver is important so that you can stop quickly if something unexpected happens, such as a sudden obstacle or a mistake by another road user. Continuing to drive as before without caution could increase the risk of accidents. According to German traffic rules, anticipating risks and adjusting your speed and readiness to brake are key principles for safe driving, especially in urban areas with parked cars and potential hazards.