Unfortunately this game has the same behavior for me as Dishonored 2 (same Void Engine).
As soon as I unlock the FPS from 60 to 120 the game is stuttery and jittery when I look around with the mouse. At a fixed 60 FPS everything is ok. As soon as the FPS drop below 60 FPS it stutters again. I am using an LG CX and I have a RTX 3090+5800x+32GB CL14 3200 RAM with Win10 (latest upgrades). Gsync is enabled. I have never seen another game except Dishonored 2 and Deathloop behaving like this. It doesn´t matter if I use a Controller or mouse to look around.

Same here with similar specs...

yes it sucks 60 or 120 fps are only possible playable

There is a beta patch that's fixing this issue. It will be available to the public in a couple of days, I'm sure.

Try the new Beta patch. Within Steam, use the code "juliannashotme" to get access to it. I had similar issues (and a nearly identical setup) and it helped me a ton. It isn't perfect, but my issues are 90% fixed.

Arkane has forgotten to add the adaptive V-sync in the graphics menu. Choosing it in the driver options will not work. I think that's the problem.

Originally posted by Michael K. Night:

Arkane has forgotten to add the adaptive V-sync in the graphics menu. Choosing it in the driver options will not work. I think that's the problem.

Wrong. The issue is not related to the framerate or VSync, it's ONLY related to the mouse control. Easily provable by using a controller -> no stutter. And also explained in detail by the video from Digital Foundry.

In any way, the beta patch fixes the issue completely.

But not for everyone. On my sytem the game would run smooth with capped 90 frames per second in the graphics menu, but the screen tearing on my 60 hz display makes it unenjoyable. In Dishonored 2 was the adaptive Vsync in the menu and the game ran smooth. Maybe for many players there is a noticeable mouse issue but not for all.