1. A navigation system for determining a position of a sensor relative to a portion of an anatomy including soft tissue, comprising: a localizer operable to produce a field relative to the anatomy; a tracking sensor for sensing the field produced relative to said tracking sensor to determine a position of said tracking sensor in the field; and a housing including said sensor; wherein the housing is operable to allow movement of the sensor relative to the soft tissue when affixed to the anatomy subcutaneously.