Preheat the oven to 350 degrees F (175 degrees C).

Melt butter in a medium saucepan over medium heat. Sauté onion in hot butter for 2 minutes. Stir in flour and cook for 1 minute, stirring constantly.

Stir in milk, salt, mustard, and pepper. Cook, stirring frequently, until mixture boils and thickens.

Meanwhile, bring a pot of lightly salted water to a boil. Add macaroni and cook until tender yet firm to the bite, 8 to 10 minutes; drain.

Add Cheddar and American cheese to milk mixture; stir until cheese melts and sauce is smooth.

Combine cheese sauce and macaroni in a 2-quart baking dish; mix well.

Bake in the preheated oven until hot and bubbly, about 30 minutes. Let cool for 10 minutes before serving.