Prepare the Chicken:

1. Preheat your oven to 375°F (190°C).
2. In a small bowl, combine chili powder, smoked paprika, garlic powder, cumin, onion powder, cayenne pepper, salt, and pepper.
3. Rub the spice mixture evenly onto both sides of the chicken breasts.
4. Heat olive oil in a large oven-safe skillet over medium heat. Sear the chicken for 2-3 minutes on each side until golden brown. Transfer the skillet to the oven and bake for 20-25 minutes, or until the chicken is cooked through (internal temperature of 165°F or 74°C).

Make the Cheese Sauce:

1. In a medium saucepan, melt butter over medium heat. Whisk in the flour and cook for 1 minute to eliminate the raw flour taste.
2. Gradually whisk in the warm milk, ensuring no lumps remain. Cook, stirring continuously, until the mixture thickens (about 3-4 minutes).
3. Reduce the heat to low and stir in cheddar cheese, Monterey Jack cheese, chili powder, smoked paprika, and salt. Mix until the cheese is fully melted and the sauce is smooth.

Assemble the Dish:

1. Remove the chicken from the oven and spoon the cheese sauce generously over the top.
2. Garnish with chopped cilantro, diced tomatoes, or sliced jalapeños if desired.

Serve and Enjoy:

1. Serve the chicken hot with your favorite side dishes, such as rice, beans, or steamed vegetables.