Combine sugar and 1/4 cup water in a medium heavy saucepan; bring to a boil. Cook 15 seconds or until sugar dissolves.
Remove from heat; add jalapeo to sugar mixture. Cover and let stand 1 hour or until cooled to room temperature. Strain sugar mixture through a fine mesh sieve over a bowl; discard solids.
Combine watermelon, blueberries, and peach in a large bowl. Stir in sugar mixture and juice, tossing gently to coat.
