The set of units of $\mathbb{Z}/10\mathbb{Z}$ is $\{\bar{1}, \bar{3}, \bar{7}, \bar{9}\}$, how can I show that this group is cyclic?
My guess is that we need to show that the group can be generated by some element in the set, do I need to show that powers of some element can generate all elements in the other congruence classes?
For example $7^2 = 49 \equiv 9 \pmod{10}$, i.e using $7$ we can generate an element in the congruence class of $9$, but can not generate $29$ for example from any power of $7$, so is it sufficent to say that an element is a generator if it generates at least one element in all other congruence classes?
You had just the right idea, then got sidetracked. What you've seen is that $\overline 7^2=\overline 9.$ From this, it does, indeed, follow that $\overline 7^2=\overline{29},$ since we're thinking modulo $10.$
From there, $$7^3\equiv 9\cdot 7=63\equiv 3,$$ so that $\overline 7^3=\overline 3,$ and similarly, $\overline 7^4=\overline 1.$
As an alternative, we could show that $\overline 3^2=\overline 9,$ $\overline 3^3=\overline 7,$ and that $\overline 3^4=\overline 1,$ which is arguably even simpler, since $3^2=9,$ $3^3=27,$ and $3^4=81$ are math facts you probably know.