If your computer is set to “Obtain an IP address automatically” and cannot find a DHCP server, it will probably generate an IP address similar to this address 169.254.x.x. Some modems are a combination of a router and a modem, so you may only have one device. In all cases, the router handles DHCP.
Your Windows computer must obtain some sort of IP address from the DHCP server. If that process fails, it gives up and uses Automatic Private IP Addressing (APIPA) to generate its own. This often results in your computer not being able to connect to the Internet or see other computers on your local network. This problem with IP address 169.254.x.x can have many causes.