What is the right course of action now?

In this situation, the correct action is to brake. If an unexpected obstacle or hazard appears ahead—like a vehicle suddenly stopping or a pedestrian emerging from between parked cars—the safest response is to slow down and be ready to stop. Swerving to the left is dangerous in urban areas with traffic and parked cars, and accelerating is unsafe, even if you have priority, because it reduces your ability to react to sudden dangers. In German traffic rules, having priority (right of way) never overrides the duty to avoid danger and drive defensively. Always be prepared to brake in unclear or risky situations, especially when visibility is limited by parked vehicles.