Pour the evaporated milk into a medium saucepan. Add the onion powder, garlic powder, and smoked paprika. Heat over medium until it comes to a boil, then reduce to a simmer.
Whisk in the cornstarch. Keep whisking for about 1 minute until the milk thickens slightly and looks glossy.
Add the shredded cheddar and Monterey Jack a handful at a time, whisking after each addition until fully melted before adding more.
Once all the cheese is melted and the sauce is smooth, stir in the diced pickled jalapeno and the jar juice.
Remove from heat. Pour into a ramekin for serving or transfer to a small slow cooker on the warm setting to keep it hot.