Can I change the Apple Watch simulator language?

Most certainly not possible neither via Watch Simulator UI nor iOS Simulator Watch app, but you can copy over values from iOS Simulator folder located in:

<simulator_dev_folder>/data/Library/Preferences/.GlobalPreferences.plist

to the same file in your Watch Simulator.

Plist keys to look for:

• AppleLocale
• AppleLanguages
• AppleKeyboards

Run|Options|Application Language

Unfortunately it works only on Xcode 7.2, not on Xcode 7.1. There is no other known possibility.

EDIT

There is a brand new library for language and locale automate testing. It's called AutoMate. The documentation can be found here.

You cannot change the Apple Watch simulator locale, but you can change the locale of your Watch App. I use this to test localization. To change your app locale, go edit the Watch App Scheme: Run->Options->Application Language - choose the language and re-run your Apple watch app.