Why do forex gaps happen?

In the strictest sense, these gaps are not gaps per se. We know that forex is all about the different participants of the market's expectation of exchange of one currency for another. ( Read the " What is forex? " article for more information on what forex actually is. ) "Gaps" are simply a change of expectation beyond a single pip. In your charts, it shows up as a "disconnected" progression of candles.

Therefore in the context of adverse developments, an event may have so much impact that investors "suddenly" have a much different expectation of exchange, resulting in a "jump" of bid/ask rates.

In the context of weekend gaps with the different participants in mind, while most of our retail brokers are closed for the weekend, the reality is that the world still revolves and financial / economic events still take place or develop.

For example, a Group of 7 financial meeting to discuss the current state of financial issues ( which is probably rather consequential ) may take place on a Saturday. Any unexpected result of this meeting may cause expectations to change. In reality, the currency pairs have moved during the weekend but your retail broker which is closed for the weekend will not update it's chart. When trading start on Monday, your retail broker updates it's chart, gets the latest market prices and voila a forex gap is seen!