"That will be the big event for everyone," said Colin Cieszynski, market analyst at CMC Markets Canada.
The TSX could also see further buying momentum on amid hopes that the eurozone debt crisis has turned a corner.
The Fed will take centre stage as it makes its next interest rate announcement on Thursday. While no one expects the Fed to raise rates, there are high hopes that it will announce further stimulus measures after the August non-farm payrolls report disappointed, with the economy creating 96,000 jobs.
That was less than the modest 125,000 new positions that had been forecast. To make matters worse, the U.S. Labour Department also said 41,000 fewer jobs had been created in June and July than previously reported.
Expectations for Fed action have grown since the release last month of the minutes of the last Fed meeting Aug. 1, where several Fed members thought the central bank could do more to help the recovery.
While the minutes raised hopes for more action, analysts noted that there was a slew of economic data during August which seemed to indicate the U.S. economy was improving steadily.
But some felt that Friday's jobs data pretty much sealed what the Fed would do this week.
"Not only does this report fail to meet the Federal Reserve’s criteria for a substantial and sustainable strengthening in the pace of the economic recovery, it is downright dismal," observed TD Bank senior economist James Marple.
"Sub-100,000 job growth is likely enough to convince the Federal Reserve to announce a further round of asset purchase at their meeting next week."
One avenue the Fed could pursue is a third round of quantitative easing, which involves the Fed printing more money to buy up government bonds, which further keeps a lid on interest rates and hopefully encourages more borrowing.
But others aren't quite so sure that on balance the Fed thinks the economy is faltering to a point where it has to step in at a rather tricky time.
"We are now well into the election campaign and it’s very clear from both sides that the economy and the role of the government in it is front and centre and you still have the Republicans who would basically like to fire Bernanke at the earliest opportunity," said Cieszynski.
"If you had a point where the U.S. was losing jobs, then the Fed might step in but it doesn’t have that urgency situation."
Cieszynsky noted out that opinion seems fairly split on what the Fed will do Thursday "and because of that we could see markets break in either direction depending on how the news goes when it comes out."
The TSX ended last week with a solid gain of 2.66 per cent in the wake of the European Central Bank's announcement on Thursday that it would buy up government bonds in order to lower borrowing costs of some of the most vulnerable eurozone countries.
The plan amounts to a commitment to buy unlimited amounts of short-term bonds from euro countries that request help. Ostensibly, the plan is meant to ease the financial pressures on Spain and Italy by giving them time to reduce debt and reform their economies.
The ECB had been under pressure to take action after Spain and Italy became the latest countries forced to pay yields in the seven per cent range on their benchmark 10-year bonds in recent months, a level that raised worries that they could be forced to seek bailouts.
The TSX resource sectors particularly benefited from the ECB announcement. It raised hopes that greater financial stability in Europe will help the region get out of its economic slump, hopefully hike demand for oil and metals and send shares prices higher on the resource-intensive TSX.
Aside from the Fed meeting, it is a relatively light week for economic news.
U.S. retail sales data for August will be released on Friday.
And in Canada, traders will consider housing starts data for August on Tuesday and a report on manufacturing shipments for July on Friday.