Turns out, it is already on the list of known issues. It looks like the issue was acknowledged after the last update was released. Moreover, the suggested workaround of pressing F12 do not seem to be working either.
Fix 1 -
Temporary fix, program a button to “Toggle Head Tracking” undedr controls, and when it turns off you can turn it back on without having to go into the camera menu.
Acknowledged
Msfs aware of this issue.
SIM UPDATE 7 KNOWN ISSUES
General:
TrackIR may sometimes stop working properly during a flight. Press F12