This appears to still be broken in Xcode 12.5.1 when using a watchOS 7.4 simulator and in Xcode 13 beta 1 when using a watchOS 8 simulator.
Xcode 12.5 and 12.5.1 do work when using a watchOS 7.0 simulator, as @cordechasse suggested. I didn't try a watchOS 7 simulator in Xcode 13.
Topic:
Developer Tools & Services
SubTopic:
Xcode
Tags: