Watches placed on files do not work with API keys when using basic authentication. Similar to https://www.jfrog.com/jira/browse/RTFACT-9791 but it looks like using the API Key in a header (old method) does work.
1. Place a watch on a repo
2. Create an API Key for a user with deploy permissions on the repo
3. Deploy an artifact with the API using basic auth, for example:
Notice that no email is sent.