Outlook IMAP won’t work with custom domain

I have set up a custom domain on Outlook.com. I want to use Apple’s Mail.app with IMAP configuration, but without success so far. Here’s the error I get:

I get the same error when trying to configure IMAP on my iPhone, while Exchange ActiveSync works fine. Network Diagnostics says that it connects successfully to IMAP and SMTP servers, but it doesn’t sync any messages or folders. POP mail seems to work fine.

I followed the steps shown here on how to properly set up the email client and I double-checked to make sure I have entered everything correctly. Does this have something to do with the thing that I use a custom domain?

Thank you,

Gjorgji