So i had a similar issue, while it did not start happening immediately after Mojave upgrade, my mail account just randomly stopped syncing about 24 hours ago, no errors/warnings nothing connection doctor reported all OK
First thing i tried was delete account and re-add, this time i got the shiny oAUTH interface and MFA prompts from Office365 rather than needing device passwords etc and then i got stuck into the same loop as you.
From various googling and reading i have found a potential solution (potential in that it has yet to "delete" my account so far since doing it.)
The trick is do configure manually and use the following internal and external server URL "https://outlook.office365.com/EWS/Exchange.asmx"
I also setup a device password and used that rather than my account password just like i did on older versions of MacOS that did not support MFA from Office365
it sounds like Apple has borked something in the oAuth/MFA routine for Exchange/Office365 accounts - this almost harks back to the original bugs when they started making Google Apps/Suite work with MFA on Mail.app