What is the right course of action?

Your answer is correct because you have to allow both the cyclist and the blue car to proceed first.

According to German traffic rules, when you want to turn left, you must give way to oncoming traffic going straight ahead or turning right, as well as to cyclists who have the right of way. In this scenario, the cyclist is crossing the intersection on your left side, and the blue car is coming from the right side, already positioned to pass through the intersection.

You must wait for the cyclist to complete their turn and allow the blue car to pass before you turn left. The third option, that the blue car must wait for you, is incorrect because as a left-turning driver you have to yield to traffic coming from the opposite or crossing directions unless otherwise signaled.

In the future, remember that when turning left, always yield to oncoming vehicles and cyclists crossing your path. This ensures safety and follows the right-of-way regulations in Germany.