What is the right course of action now?

Your selections are correct. In this type of city driving situation—where you have parked cars on both sides and other vehicles overtaking—German traffic rules require you to be particularly cautious. It is important to reduce your speed because parked vehicles can hide potential hazards, like pedestrians suddenly stepping into the street or car doors opening. Getting ready for an emergency braking manoeuvre is also essential in busy urban environments, as unexpected obstacles or other road users may appear at any moment. Continuing to drive as before would not take these potential dangers into account. Always remember: whenever there is limited visibility or potential risk from parked cars, lower your speed and be prepared to stop quickly if needed.