Seeking advice on blending two images

Per this screen grab of my workspace, I’m trying to blend the rainbow into the sky.
Sky image (resized for uploading) So far I've used motion blur, curves and the Background Blue layer to modify the cloud background image below into the above look.

From there, I’m trying to make the rainbow look like part of the sky. The rainbow image was uploaded from an EPS file. I thought the EPS had a transparent background, indicated by the checkerboard background on both the original image and the imported image. But the checkerboard is obviously showing through and blocking the sky. Did I do something wrong in bringing in that original EPS file? If the rainbow image was truly transparent, then it would be easier to blend into the sky image.
My other question would be the best place in the Layers window to put the Background Blue layer, and the ideal setting for it to tint the entire piece light blue. I'm assuming the cloud and rainbow images should be blended first, and then the blue brought in, all though I'd like to make sure the blue doesn't override the rainbow colors.
Greatly appreciate anyone's input on this.


