What is the right course of action?

You answered correctly. In this traffic situation, you want to turn left. The cyclist coming from the opposite direction and turning to their left has the right of way, so you must allow the cyclist to go first. After that, the blue car on your right (coming from your right-hand side) also has the right of way according to the "right before left" rule at intersections without traffic signs or signals. Only after both have passed can you make your turn. This order ensures safety for all road users and follows German right-of-way rules at intersections.