Outlook 2011 v14.6.4 on Mac does not connect to hotmail.com starting on jun/06/2016 (Authentication failure: unknown user name or bad password)

Hi all

I have Outlook 2011 v14.6.4 installed on Mac.

It was working without problems but starting on Monday jun/06/2016 outlook client is not able to connect to hotmail.com to download or send emails.

I am getting following error message:

Error

Authentication failure: unknown user name or bad password. [Error="ProxyNotAuthenticated" AuthResult=0 Proxy=BN4PR14MB0564.namprd14.prod.outlook.com:1995:SSL]

Details

Could not retrieve mail.

Account name: "myHotmail"

Error code: -17900

I am completely sure username and password are correct since outlook worked fine until Sun. jun/05/2016 and I can access my messages via web.

I appreciate any help to solve this.

Thank you

Rafael