Boil water and then add the cashews and soak for 10-15 minutes to soften. Alternatively, soak overnight.
Dice the onion and garlic and sauté it in a pan over medium heat until it starts to soften and get lightly browned. If using fresh jalapeño (instead of pickled), mince and sauté it with the onions and garlic.
Add the softened cashews and onions to a high-speed blender along with the roasted red pepper, pickled jalapeños, nutritional yeast, lemon juice, salt, smoked paprika, onion powder, black pepper, and water. Blend until smooth.
Touch the sauce and rub it between two fingers. If the sauce has texture, keep blending.
Taste and adjust the salt and pepper to your preference.
Add the cheese sauce to a pan on low heat to warm up or serve chilled as a dip with tortilla chips, drizzled on tacos, or burrito bowls. Enjoy!