After a lot of experimentation, I have found a workaround. Open the Apple Watch app on iOS Scroll down until you see your app name, tap it and disable Show App on Apple Watch Go back to Xcode and try to run the app on your Apple Watch again, the app should work now and allow you to use the debugger too.

The app seems to be Waiting for Review. Refreshing the page should get both statuses in sync again. If that doesn't work, you could also verify the status in a different browser or the App Store Connect iOS app.