A 3-2 win at English Premier League leaders Basingstoke on Boxing Day helped end a nine-game losing streak for the Steeldogs, who remain rooted outside the play-off places in the bottom two.
Manchester arrive at Ice Sheffield buoyed by a six-game winning run, the last victory coming at home on Thursday night in a 10-2 thrashing of bottom club Telford Tigers.
But Payette believes his side may spring a surprise on their neighbours, whose visit will mark a first return for former Steeldogs forward Derek Campbell, who was swiftly snapped up by Phoenix coach Tony Hand after being released by the Steeldogs 10 days ago.
“It was a timely win for us and if we can win somewhere like Basingstoke then we’ve got to be confident playing anyone at the moment,” said Payette.
“The team played with passion and our goalie made some key saves which is always crucial for us. Confidence has been missing though and sometimes, for whatever reason, it is sometimes more difficult to restore confidence in younger players.
“We’ve still got a good, young team, I believe, and to lose a lot of games by the odd goal here and there can get very frustrating.
“Nothing would help our cause and confidence more than a win over Manchester – it’s a massive game for us.”
Previous encounters between the Roses rivals have seen Manchester come out on top so far, the worst scoreline being a 9-1 thrashing in Manchester earlier this month.
Manchester’s previous visit to Sheffield in September saw them triumph 4-2. The Phoenix also won 5-3 at home to the Steeldogs on December 20.