Hi All,
We are facing below SMTP Authentication error while testing the connection by enabling the Authentication required option in Email parameters. And also tested the process by disabling the authentication option we are able to send all the reports successfully.
"Mail authentication failed. Please verify your SMTP user name and password. If your SMTP server doesn't support authentication, please clear the SMTP user name and password. Server smtp.office365.com:587 using SSL/TLS supports the following authentication options: LOGIN, XOAUTH2"

Below are the screen shots of the Email parameters configuration setup:

We have tired few blogs but still not able to resolve the issues. Below are the few links:
Authentication issue when using SMTP in D365 FO - Dynamics 365 Supply Chain Management Forum Community Forum
Enable or disable SMTP AUTH in Exchange Online | Microsoft Learn
Please help us to resolve it. All Suggestions will be greatly appreciated.
Regards,
Swetha.