1. Go to your user pool in the console.
2. Go to General Settings -> App Clients (NOT App Integration -> App client settings)
3. Click on "Show details" under each one.
4. Look at the "App client secret" field.

In my case Amplify had created two app clients for me, one with _app_client at the end, which had a client secret. One with _app_clientWeb at the end which had no client secret. They appeared to be otherwise identical. You want to select the App Client id from the one without the secret, or create a new app client that has no secret.

I had the same issue, it seems that AppSync doesnt allow using a user pool that has a client secret, so i created new user pool and I unchecked the generate client secret option while creating the App Client. Now it is working well.