Clamp the hose out of the master cylinder with smooth-jawed vice grips or a G-clamp to block it. Now squeeze the lever.
If it is un-squeezable, the problem will probably be air in the system. If you can squeeze the lever in, the master cylinder seals and/or piston have the F syndrome.
Just a thought - your bike doesn't have the brake line pressure-driven anti-dive system on the forks, perchance?
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