What is the right course of action now?

You answered correctly by choosing to get ready to brake and watch the cyclist closely.

In German traffic rules, when you see a cyclist approaching a curb or sidewalk, you must anticipate that they might move onto the road or start crossing. Being ready to brake ensures you can stop safely if the cyclist suddenly enters your lane. Watching the cyclist closely helps you judge their behavior and react in time.

The third option — maneuvering over to the left side of the road — is not advised yet because the cyclist has not indicated any movement onto the road. Prematurely changing your position could create unnecessary risk or confusion.

So, the key principle is to stay alert, prepare to slow down, and observe the cyclist carefully until it becomes clear whether you must stop or change your position. This approach keeps you and the cyclist safe.