Once you've reached Parade Square, defeat the first set of enemies then loot the two chests to the north. Go south and you'll be trapped again in a small barricaded area. Defeat the enemies to proceed then move to the left to encounter a pack of wolves. Defeat all of them to reveal a chest in the middle of the circle.
Get past the spike trap then clear the area of plumies led by a spirit. Finally, in the last stretch leading to the boss area, deal with more plumies and defeat all of them. Make the preparations then go upstairs to reach the boss area.
Boss: Blueblood Cavalry Carousel
Keep an eye to the spike traps in this area. They're not activated by default and will only trigger when the boss activates them. This boss will gallop around the area, sometimes it will create a small shockwave upon landing, sending Arnice flying if she's too close to the impact area. The boss can also summon smaller demons to keep your own servans preoccupied or even damage your healer. If you still have a woode golem servan with you, he'll do a great job keeping these minions isolated for a short to allow your other servans to use their Bursts.
About halfway in its HP bar, the spike traps will activate. Avoid passing through them if you can help it. The boss will also be able to summon possessed carousel carts that will explode on impact. Keep chasing after the boss and keep building combos to deplete its HP faster.
Once you fully deplete its HP, it will appear to be defeated since a chest will appear beside it. Don't be fooled though; as you get near, the boss will resurrect, with half of its HP full. It will also become more dangerous than ever, capable of blacking out the screen and releasing bombs around it. It will be hard to attack it up close so if you still haven't used your transformation, this is the perfect time to activate it. Finally, once it's HP is depleted, it will transform to a cannon as its death throe. Quickly get out of the cannons' firing range and wait for the beams to subside to fully end the battle.