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Ryu was holding back throughout the Sendai clash and could one-shot Yuta when he went all out. Throughout the fight, Ryu is simply testing Yuta (as stated) before going all out; he maintains a casual, even kind of disinterested, expression throughout the first clash between them. His expression is much more intense during their last clash, where he is using more power (going all out during the Rika punch).
Ryu can one-shot Yuta with what is presumably a near full charge according to himself (he was able to judge Yuta's output and experienced it firsthand; he should be a reliable narrator here). He also shows the capability to one-shot Yuta with a punch when he goes all out, when he one-shots PM Rika, and is stated to be able to one-tap FM Rika as well, whom he calls on-par with or greater than Yuta (depending on TL, leaning toward greater than).
As for why Yuta wasn’t one-shot during their final clash, we know that CT output is lowered from damage. We also are given that Ryu’s CT output and CE output are the same, meaning that Ryu’s accumulated damage from holding back caused his output to lower, explaining why even when trying harder, Yuta didn’t get knocked out from a punch (Ryu was weakened from domain, TIB, a GB being reflected at him, a few Rika punches, and drained reserves from domain/Spammed CE blast).
CE drained Weakened Ryu ~ Yuta ~< FM Rika < All out CE Drained Weakened Ryu <<< Full HP Ryu