Why are you not allowed to overtake here?

You answered correctly. In this situation, overtaking is not allowed because the space between your car and the cyclists is too small, which would make it unsafe for them, and because overtaking could put oncoming traffic at risk. In Germany, you must always maintain a safe lateral distance when overtaking cyclists—usually at least 1.5 meters in town. If you cannot guarantee this distance due to parked cars or oncoming vehicles, overtaking is prohibited. This rule helps protect vulnerable road users and ensures safe traffic flow.