Preheat the oven to 200 degrees F. Put a wire rack on a baking sheet and place in the oven.
Grate the onion on a box grater into a large bowl. Grate both potatoes into the same bowl, grating down the length of the potato to get long strands. Toss the potatoes with the onions as you work to keep them from discoloring. Put potato mixture in a clean dish towel and wring out excess liquid. Toss the latke mixture with the flour, salt, and cayenne. Stir in the egg.
Heat a 1/4-inch oil in a large cast iron or other heavy skillet over medium heat. Working in batches, spoon about 1/4 cup of the latke mixture into the skillet, pressing lightly to form 3-inch pancakes. Take care not to overcrowd the pan. Cook, turning once, until just golden, about 2 minutes per side. Transfer to the rack in the oven while you cook the remaining batter.
Serve the latkes topped with a small dollop of sour cream and horseradish. Garnish with a parsley leaf. Serve immediately.
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