It is neither a rainbow, nor smoke from a fire, but it looks like both. This is a solar circumhorizontal arc, out in the 46 degree area. It was so dramatic, and somewhat rare, that I had to pull over to take some photographs.
Solar circumhorizontal arc, No.2
This is a more encompassing view of the arc, showing the sun and the "rainbow" below the solar disc. As one reader comments, there are some additional rainbow effects to the left and right and near the solar disc. Another reader comments that those could be cloud iridescence.